Preamble

The House met at Eleven of the Clock, Mr. SPEAKER in the Chair.

Oral Answers to Questions — INCOME TAX.

Major LLEWELLIN: (by Private Notice) asked the Chancellor of the Exchequer what is the position pending the passing of the Finance Act as regards the deduction of Income Tax from mortgage interest and ground rents, and from dividends and interest of British companies, or of Dominion and foreign companies paid through agents in this country?

The FINANCIAL SECRETARY to the TREASURY (Major Elliot): The increase in the standard rate of tax, although applying to the whole Income Tax year, will not become legally operative until the date of the passing of the Finance Act. Strictly, therefore, tax will continue to be deductible by reference to the rate of 4s. 6d. in the pound until that date. In order, however, to reduce as far as possible the necessity for subsequent adjustment, it may be found convenient, in the case of payments to be made between now and the date on which the Finance Bill becomes law, to arrange for deduction by reference to the increased rate of 5s. in the pound; but this is, of course, a matter between the payer and the recipient. The terms of the Finance Bill will, in any case, be such as to secure that, in cases where deduction of tax has been made, before the passing of the Act, by reference to the increased rate of 5s. in the pound, such deduction will, after the passing of the Act, automatically become a legal deduction as from the date on which it was made. In, view of the fact that the increased rate of 5s. is to apply for the whole year, adjustments will be necessary to make good under-deductions of tax in respect of payments made at any time
before the passing of the new Finance Act, and the Finance Bill will contain provisions relating to these adjustments. I may, however, point out that, as regards dividends of British companies (other than dividends payable on preferred shares at a fixed gross rate per cent.), no question of any adjustment need arise. Under the existing law, the net amount of any such dividend will be taken for all Income Tax purposes to represent income of such an amount as, after deduction of tax by reference to the increased rate of 5s., is equal to the net amount paid.

Mr. R. A. TAYLOR: Do the Government contemplate any extraordinary measures in order to deal with the position of small property owners who, in view of the reduction of their incomes, will be unable to pay their mortgages? Is it contemplated that a moratorium will be given, Or that any special step will be taken?

Major ELLIOT: Questions of high policy respecting moratoria had better he put on the Paper.

Lieut.-Commander KENWORTHY: As this matter is very complicated, may I ask the Financial Secretary to the Treasury if the banking authorities have been consulted in regard to it, since it affects them very much as mortgage holders?

Major ELLIOT: We have done our utmost to see that all interests concerned should he taken into consideration.

Mr. KIRKWOOD: The Minister has indicated the position of the Income Tax payer. I would like to ask him what is the position of the unemployed, who at the moment are going to be asked to accept a cut, and they are on starvation wages now?

Mr. SPEAKER: That does not arise.

Mr. KIRKWOOD: On a point of Order. My point of Order is that my question is relevant because the Minister has indicated the part that is going to be played by the Government towards the Income Tax payer. There are other individuals than the Income Tax payer who are going to be cut. There are individuals who have no income that can
pay tax, and they are going to be cut. I want them to have consideration at the hands of the government.

Mr. SPEAKER: That does not arise pose in present circumstances, on this question.

Orders of the Day — NATIONAL ECONOMY BILL.

Order for Second Reading read.

The PRIME MINISTER (Mr. Ramsay MacDonald): I beg to move, "That the Bill be now read a Second time."
My right hon. Friend the Chancellor of the Exchequer prefaced the brilliant exposition which he gave to the House yesterday of his taxation proposals by a reflection that no Chancellor of the Exchequer had ever had such a difficult and in many ways unpleasant task assigned to him. If my right hon. Friend's task yesterday was difficult, what is mine to-day? I wish to bring the House back to the actual situation in which it finds itself. This is an emergency. Everything that the House is being asked to do at this moment in connection with the particular piece of work which we have in hand is of the nature of an emergency, and the Bill, the Second Reading of which I am now moving, is an emergency Bill. It may look rather forbidding—very forbidding—almost as forbidding as a similar Bill would have been if produced by the late Government. Upon that I shall have a word or two to say a little later on.
But emergency legislation has characterised the whole history of Parliamentary government in this country. First one emergency and then another has had to be dealt with, not by maintaining the normal procedure of the House of Commons, for the simple reason that the House of Commons, in the circumstances, could not maintain its normal procedure. One of the great tests of Parliamentary government, especially in these days, when the field of Parliamentary government is not only widening enormously but increasing in complexity, must be: Can it rapidly adapt itself to emergency situations and to situations that require rapid action? The general policy of the Government has received the sanction of this House, and now we are setting our hands to the details of our duties.
The Bill that I am now moving covers a very wide field, with a very extended front, and, if the Government had to produce a whole series of Bills dealing
with each of the points raised in this Bill specifically, separately and in detail, we should be sitting here for six months while the crisis was maturing. My hon. Friends opposite have for many years been complaining about the slowness of the operation of Parliamentary business. Normally, that is so. There is one hon. Friend of mine, whom I see sitting in front of me, who has become specially impatient with the House of Commons working normally under normal conditions—

Mr. HOFFMAN: "Kid" Mosley.

The PRIME MINISTER: But the position we are facing now is this. We have had this emergency. The new Government have to face it for the time being. It is not very long before we shall have to get right down to the foundations. Either we or someone else will have to do it. But, if this temporary appeasement is going to be made effective, and if this House imagines that it can go on leaving the situation uncertain under the sway hither and thither of House of Commons opinion from day to day, then before the end of the week the various states of mind which created the emergency will be unloosed again and everything that has been done will be thrown to the winds. We join together, those of us who sit on this bench, to face the situation promptly and decisively, and we should not be doing our duty either to this House or to the nation unless we brought forward legislation such as this that. I am now moving.
If we are to balance the Budget, it has to be done quickly, but those who imagine that the balancing of the Budget alone is going to remove the causes of the uncertainty that confronted us two or three weks ago are very much mistaken. The financial position has to be made sound as well as the Budget balance. Moreover, while we put new resources in the Treasury it is our duty swiftly to stop the cracks through which resources have been flowing unnecessarily. Furthermore, the action of economy must be made effective all at the same time. You cannot ask teachers to submit to reductions in October, policemen in November and the unemployed in December. The whole thing has to be put into operation simultaneously and quickly, and this Bill is required to enable that
to be done. The normal Parliamentary procedure would mean that the Government would be quite unable to undertake the swift action that is necessary in order to avoid the crisis.
The Bill that is before the House lays down procedure which is as drastic as the proposals that it contains. Neither is palatable, but both are necessary. I hope hon. Members opposite, whatever their feelings and passions may be, will know perfectly well that an emergency measure like this is distasteful to me, and that I should never propose or dream of proposing it unless I was driven by my sense of national necessity. The first Clause of the Bill lays down the procedure. The procedure is to be that certain Orders-in-Council shall be issued in accordance with the later provisions of Clause I and in respect of services the nature of which is detailed in the Schedule of the Bill. Those Orders-in-Council, however, can only be issued within one month after the passing of this Bill. What has been left undone at the end of that month cannot be done. The Bill giving the Government power to issue Orders-in-Council only lasts for one month. Then the Government's powers to issue those Orders lapses. An Order-in-Council issued has the effect of an Act of Parliament and can be changed only by an Act of Parliament. That is a very great advantage, because it means that, when a change comes, that change will come as quickly as the whole field can be surveyed.
There is no man or woman who has been a member of the Government—I cannot speak exactly for the Conservatives, I am speaking for Labour; they can take the label from my back but they cannot take the label from my mind—every person who has been in an office, who has been in a Department either as head of the Department or as a subordinate political officer in the Department, knows perfectly well that we have built up a great series of aids and defences piecemeal. The action has not been systematic. It has not been balanced. It has not been systematised. It has been of this character. Anomalies have been found over a certain area which some people perhaps thought originally had been covered by some legislation but which have been found afterwards not to have been covered by that legislation at
all. An Act is passed dealing with that specific point. Then, later on, something else is discovered, a real sound grievance, and, in order to meet it and to mend it, another piece of legislation has been passed, until to-day, whatever Department you survey, whatever constructive piece of social legislation, either of the nature of reconstruction or of the nature of aid, if you survey the whole of that field you will find the legislation working inconsistent in its form and inadequate and clumsy in its operation and the time has come when the experiences of the last few weeks, and the action that we have been driven to take in consequence of those experiences will give this House an opportunity of making that complete survey, not for the purpose of diminishing efficiency but for the purpose of increasing efficiency and of completing the whole plan which is so piecemeal at present.
So it is well that, if Orders-in-Council are to be issued now, they themselves should not be subject to pettifogging changes, unsystematic and ill-considered, and that by the very existence of such Orders-in-Council, as soon as we get back to normality, there will be pressure brought to bear upon any Government that sits in this House to use the time at its disposal to reconsider and reconstruct, and upon that reconsideration and that reconstruction the Orders-in-Council can all be reviewed. The Orders-in-Council are limited in their operation. If hon. Members will look at Subsection (1, a} they will find the beginning of four limitations. The Orders-in-Council can only deal with (a), (b), (c) and (d). As to paragraph (a), hon. Members will find the details in Command Paper 3952. That is the Memorandum of the Measures proposed by His Majesty's Government. They will find there, on page 6, under Ministry of Health, the explanation of the first form. It simply amounts to this. It is proposed that there should be a certain readjustment of funds, not to diminish the efficiency of the service, but to transfer certain funds going in certain directions which, in our opinion, after very careful examination, are not very profitable from the point of view of Health Insurance. Powers will be taken in the Orders-in-Council, issued in accordance with paragraph (a), to transfer those funds. The only fund that appears to be affected is the Pensions Fund. I
will leave the Minister who administers this Department, and has all the details at his finger's end, to make any detailed explanation of that matter.
The position at the moment is that this fund has to be revised in 1944, and the financial position of the fund, the inflowings and the outgoings by 1944, is going to necessitate the re-examination of the position of the fund. The effect of the proposal made in the White Paper that certain employers' contributions should be transferred from that fund to certain general expenses of the National Health Insurance will mean that the examination will have to be made two years earlier. That is the only substantial change that is proposed in the working of this fund.
Paragraph (b) refers, for instance, to powers being given to local authorities to do certain things as the agent of the Ministry of Labour without adding to their existing duties. [An HON. MEMBER: "The Poor Law."] No, to enable the machinery of the local authorities to be used by Employment Exchanges. [An HON. MEMBER: "The Poor Law."] I am coming back to that. I advise hon. Members to reserve any expression of opinion until I return to the matter. Paragraph (c) is to enable increased contributions to be made to the Unemployment Fund. It is impossible at the moment under existing Statutes for the Treasury to take over the shortcomings in the fund, the lack of balance in the fund, after the present borrowing legislation ends; it is impossible for the Treasury to take over the responsibility of the fund without some legislative change, and we are taking powers to make that change under Paragraph (c). Paragraph (d) enables certain contracts to be readjusted. [HON. MEMBERS: "Broken."] If you like to say "broken." Certain contracts to be revised. The Schedule deals with the Departments which will be affected by the Orders-in-Council. Those are the provisions of the Bill.
Let me come to the substance of it. If hon. Members carry in their heads, or if they have in front of them some of the figures given by my right hon. Friend yesterday, they will see that the balance of the scheme works out like this. A sum of £70,000,000 is to be found by
economies, £80,000,000 by taxation, of which £57,000,000, considerably more than half, is to be found by direct taxation. A sum of £20,000,000 is to be covered by provisions made as regards the Sinking Fund, and then in the background, not estimated as yet, is to be a conversion scheme launched at the very earliest possible opportunity which is going to effect considerable savings.
When the new Government came in, it was very greatly aided, and its time was very much shortened, by the work that was left done by its predecessors. Taking the lowest of their demands—this was the lowest of them; there were others which were higher, but I want to be fair—they proposed at the best a cut, not of £70,000,000 but of £56,000,000, a difference of £14,000,000. I admit that it is a difference, but I should like to hear my right hon. Friend, who, I believe, is going to succeed me, address himself to this matter. I should like to hear him address himself to the question of whether £14,000,000 is a difference of principle or not. Our taxation scheme—I am only using round figures—produces £80,000,000. The taxation scheme that we started our work upon, was £88,000,000, and in order to get it, tea and sugar had both to be taxed. There was still a deficit on that. [Interruption.] I do not want any misunderstanding. In order to find that sum, when we were considering the possibilities of it, it was perfectly plain that further indirect taxation was required, and that that indirect taxation, unless it became absolutely oppressive on the points where it was laid, would require to be broadened, and the only way' to broaden it was sugar and tea.

Mr. LANSBURY: Do I understand the Prime Minister to say that the Cabinet discussed a tax on tea and sugar?

The PRIME MINISTER: The Cabinet—well, it was not—[HON. MEMBERS: "Answer!"] The question of £88,000,000—[HON. MEMBERS: "Answer!"] I will if hon. Members will allow me. The question of £88,000,000 was discussed between those who required to produce the details for the making of a scheme to fit into a practicable Budget proposal. [HON. MEMBERS: "Sub-Committee!"] A sub-committee certainly, but in the Chancellor of the Exchequer's opinion,
and in the opinion of those who work with him, the £88,000,000 which was settled by the responsible, the directly responsible people—[Interruption.] I am sorry if hon. Members opposite misunderstand me. The £88,000,000 could not be found on beer and tobacco. If hon. Members work out the proportions they will see that it was impossible to find it on beer and tobacco, and the next things were tea and sugar.

HON. MEMBERS: Question.

Mr. LANSBURY: I only want this for clarity and accuracy. I want the right hon. Gentleman, if we are to discuss what happened in the Cabinet, to give a categorical answer to this perfectly simple question. Was there at any time any discussion of the particular taxes for indirect taxation, not in the Sub-Committee but within the Cabinet?

The PRIME MINISTER: That is perfectly true. I do not want to go into these—[Interruption.] These figures were the basis of our examination. They had been communicated to people outside the Cabinet, by the instructions of the Cabinet.

Mr. LANSBURY: rose—

The PRIME MINISTER: Please allow me to proceed. Figures were put up. The Cabinet were told that only gross figures could be mentioned regarding taxation, for ordinary Budget reasons. They were examined by those who would have to make them good.

Mr. LANSBURY: I have asked a specific question.

The PRIME MINISTER: If there is some misunderstanding, let me clear it up. The £88,000,000 was on the scheme which we were instructed by the Cabinet to communicate to others. [Interruption.]

Mr. LANSBURY: I ask for a specific answer.

Mr. SPEAKER: The hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy) is interrupting far too much.

Mr. LANSBURY: The point that I am asking to be cleared up is a perfectly simple one. I understood the right hon. Gentleman to say, at first, that the
Cabinet had discussed tea and sugar. [HON. MEMBERS "No!" and "Yes!"] May I ask a perfectly simple question? Is it or is it not a fact that no details as to how the indirect or direct taxation was to be raised were ever discussed by the Cabinet as a whole?

The PRIME MINISTER: I said so. [HON. MEMBERS: "No!"] I aim perfectly certain that if hon. Members will look at the OFFICIAL REPORT to-morrow and read what I said, they will see that. I did not say—[Interruption.]. Well, if I have given that impression let me withdraw it instantly. What I did say was that the figure of £88,000,000 was the figure for taxation, direct and indirect, and I made the comment that the £88,000,000 could not have been made up by taxation without extending the field of the taxation, and including tea and sugar. If there has been any misunderstanding, I hope that it has now been cleared up. I do beg hon. Members who have any doubt about it to work the thing out for themselves on the figures that are available.
That left £44,000,000 to be found from some other source—Sinking Fund, and so on. I want to ask my right hon. Friend opposite, where does his point of principle come in? I am at a loss to understand some other statements that have been made. The differences between us are of very little account in the nation, but they are interesting to the back benchers. [HON. MEMBERS: "Hear, hear!"] This programme upon which we have embarked could he carried out, especially the cuts. [Interruption.] I am repeating what I stated before, that we are only carrying on not only the policy that was laid down as a possibility in the Paper, but a policy that was actually begun. The 5 point cut on the Civil Service, decided upon by the late Government, was put into operation by the late Government, and it, was done on this distinct understanding, and some of us would never have agreed to it but for that, that the Tomlin Report was untouched by that act, that the 5 point cut was not a cut in wages in the sense that previous cost-of-living cuts had been but that, pending the examination of the Tomlin Report and the decisions, upon the Tomlin Report, the lower ranks of the Civil Service should be asked to
accept as from the first day of September this 5 point cut as their contribution to the economies that were needed.
There is this further point in regard to the Departments. It is in the records of the Departments and is no Cabinet secret. Instructions were given to Ministers to approach the various people affected by cuts proposed in their Departments, and to open negotiations with them upon those cuts. The first was the Minister of Education. He was instructed, first of all, to begin negotiations on a 20 per cent. cut.

Mr. LEES-SMITH: If the Prime Minister will refer to the Cabinet Minutes he will find that, although there was a discussion on a 20 per cent. cut—there was naturally a discussion upon it as it was proposed in the May report—no such instructions were given to me. The instructions given to me as the result of a later discussion were in regard to a shorter cut.

Mr. McSHANE: I desire to ask you, Mr. Speaker, whether it is not right as certain specific papers have been referred to that they should be produced to the House on demand?

Mr. SPEAKER: The rule about that is very well known.

Mr. McSHANE: Am I to understand from your remark that the paper must now be produced to the House?

Mr. SPEAKER: I understand that there is no paper to he produced.

The PRIME MINISTER: These conversations were not in the Cabinet but with the representatives of those who were to be affected by the cuts, first on a 20 per cent. basis and then on a 15 per cent. basis.

HON. MEMBERS: No!

Mr. LEES-SMITH: Conversations on a 20 per cent. basis wore never begun nor was I ever instructed by the Cabinet.

HON. MEMBERS: Withdraw!

The PRIME MINISTER: These were conversations which were reported outside and which were known to have been opened up; beyond that I do not go. If the right hon. Gentleman the late President of the Board of Education tells
me that he did not open conversations on a 20 per cent. basis—[HON. MEMBERS: "Nor on any!"]—he did open conversations on a 15 per cent. basis. He has said so.

Mr. LEES-SMITH: I did not, in fact, open conversations on anything at all, but I say that I was not instructed by the Cabinet to open conversations on a 20 per cent. basis. I was instructed by the Cabinet to open conversations on the lower percentages—the figure has been mentioned—[HON. MEMBERS: "What figure?"]—the figure of 15 per cent., but, in fact, those conversations had not been opened by the time the Cabinet resigned.

The PRIME MINISTER: I am perfectly willing to leave the matter there.

Mr. BOWEN: Will the Prime Minister allow me to ask this question. Having regard to the fact that these conversations were considered with other people may I ask with whom he had conversations with regard to the Civil Service cut?

The PRIME MINISTER: That was a Cabinet decision. There is one general observation which I would press upon the House. We were told that all these schemes were tentative, everybody knows that; it, is no secret. It has been in the newspapers again and again, and it has been in the newspapers quite authoritatively communicated by both sides that there were various schemes. There were at least three schemes. Do let the House remember that these schemes were tentatively put together by the body of men who held supreme political authority in this country and that these tentative schemes, by the instructions of those in authority, were handed to the Chancellor of the Exchequer and myself to communicate to the representatives of the other two parties and to the representatives of the Bank of England. I have previously explained why this was necessary. Can anyone imagine the extraordinary nature of the position; the governing body of the country, especially in the circumstances with which we were faced, producing schemes and asking the Chancellor of the Exchequer and myself to go and communicate them to the representatives of the other two parties and then when they have asked us to do that to hold themselves in a position to say,
"We are not responsible." I hope the House will bear with me for one minute more. It was quite clearly understood right through, and it was impressed on everybody concerned, that it was not merely a balancing of the Budget in a way that was our problem but that we had to put unemployment finance not in a position in its amount to please any friends of ours, Liberals or Conservatives, but to put it in such a sound position that everybody having financial transactions with this country, especially in the form of loans, was satisfied that our financial fabric was safe and sound.

Mr. GEORGE HARDIE: To satisfy the foreign financiers.

HON. MEMBERS: Hear, hear!

The PRIME MINISTER: I see there is hilarity opposite. I would refer hon. Members to the statement on that point made on Tuesday by their Leader. Now as to details. I would make these general observations. This White Paper is meant to indicate the maximum to which the Orders-in-Council can go. We pledge ourselves to that. There are certain sums of money put down opposite the Departments. For instance, on one Department there is a saving of £1,500,000. There are suggestions for that in the May Report and in all the documents dealing with this—that these economies might he made in a certain way. But, especially after the very thorough review of the whole situation that the new Government has been able to take, we find that a decision come to—this is not giving away any secrets—by our predecessors, that when they put down, say, £1,000,000 saving and suggested a way in which it could be made, that did not amount to an instruction to the Department to save the £1,000,000 in that particular way, but that the administration of the Department had an amount indicated, to find the money in the best way the Department could, and that the gross sum to be found was the sum stated. That still holds good. Then on page 4 of the White Paper, Defence Services, there are over £4,500,000 included in the saving other than wages and pay and so on. It is a saving in the ordinary defence expenditure of the Department.

Mr. MILLS: Out of wages.

The PRIME MINISTER: Not out of wages. It can be argued that everything is wages, that everything is labour that has to be paid—[Interruption.] I think it would he far better if I went over the ground generally and left details to the Minister concerned if information is required. I must say, regarding one service, Air, that the decision that this House came to regarding Cardington, will, very much to our regret, have to be departed from. The situation has completely changed since the House came to that decision. The service will be left now to care and maintenance parties. R.100 will he disposed of, and the masts, the paraphernalia that has been provided in various parts of the world to facilitate airship flights, will be reduced to the same status. There will be a staff kept to watch and observe and make experiments. It is the scheme which the Government a few months ago rejected, the cheapest scheme recommended in the special report handed in by the May Committee. This programme, which can he carried out at a cost of £20,000 per annum, will effect a saving of £110,000 per annum. I mention the matter, because it is contrary to the decision that this House has already taken. The other parts, Education and National Health Insurance, are set out in the White Paper. I think the explanation there is quite plain, as to the transfer of these various sums from one fund to another, the object being to maintain the health service in its present efficiency.
Regarding the police it has been decided—perhaps hon. Members will turn to Page 7 and the last six or seven lines of the paragraph headed "Police"—to make, instead of the original proposal,
supplementary deductions from pay on a graduated scale according to rank, commencing at 5s. weekly for constables, whose scale rises from 70s. to 95s. per week. These deductions will continue for a year from the 1st October, 1931. The detailed measures for effecting the additional savings of similar amounts to he secured in the second year are reserved for further consideration.
This is limited to one year, during which negotiations for a more complete settlement will be conducted.
As regards the Ministry of Agriculture, the Department of Agriculture in Scotland, Forestry, the Empire Marketing Board and the Colonial Development
Fund, the economies are all with the concurrence of the Departments. As to Unemployment Grants, everybody has been convinced at some time that the expenditure on this relief would require revision. It was set up as a very special emergency. It did very admirable work, but recently it has been tending rather to take the place of the local councils' quite specific duties, and so was tending to flow over its legitimate boundaries. Everyone who has had experience of the Department has felt that the time had come for a revision.
12.0 n.
On Unemployment Insurance one comes to what undoubtedly is a great bone of contention. [HON. MEMBERS: "Hear, hear."] I know; I know it perfectly well. It is what seems to be the hardest of all these economies. If you believe me, if you would really go into the conditions of many of the teachers and of the policemen, who in some ways are just a little bit more secure, really it is not true to say that there is no hardship in the others—I mean real hardships.

HON. MEMBERS: We do not say that.

The PRIME MINISTER: Hon. Members really must not make interjections with one meaning, and then think hack and put another meaning. All I want to say is this: That it is quite a waste of breath and sympathy, because everyone knows what is the great human problem underlying our social state, especially during these years. There is not a soul alive who would simply, in a free and open field, with circumstances absolutely under his control, make suggestions for cuts like this. [Interruption.] I am glad to say that a great many of them understand. You can do this in one of two ways. You can, by invisible means, reduce the relief given to the unemployed.
You can do it in various ways. You can do it by a tariff. [Interruption.] Well, nobody ever said "no." You can impose a 10 per cent. or 20 per cent. revenue tariff on imports, and to that extent make a cut indirectly. You can adopt a tariff with constructive industrial effects. [Interruption.] I am very sorry if hon. Members will not listen to an objective statement of facts, whether one believes it or not. You can do that and you can make invisible cuts in that way and you can balance them
by supplying more opportunities for earning wages. Or you can do it in this way, and this is the most disastrous of all ways—you can allow the value of your currency, not to go down with care and with control, but to go down without rhyme or reason, because of what is found in a super-excited public opinion. You can do it in all these ways. I and my colleagues here who preferred this straightforward way have taken so much per cent. off and are basing the so much per cent, off upon decreases in the cost of living—[HON. MEMBERS: "They are not true!"]—and the increase in the value of money. [HON. MEMBERS: "What about rent?"] Do remember that when you let loose upon us, as I know you will—[HON MEMBERS: "Hear, hear!"] I know that. I have known you of old. That great knowledge of you which came from very intimate friendship is not, so far as I am concerned, ever going to he diminished, but I do know this—that proposals were considered to take from the pay given to these people either as transitional benefit or as insured benefit, certain sums for certain purposes.
That is one way of making cuts, and, if that is true, you can give it any name you like, but it is a cut. You can consider whether 5 per cent. can be done or whether 10 per cent. can be done. When we were in office last, in 1924, and the Election came at the end of our term, every platform rung when Labour candidates were upon them, with speeches asking the working class to vote for the Labour Government's return to office because they had done so well for the unemployed in 1924. Well, on seeing these problems in front of us. I confess to you that the first thing that entered my mind was this: Would it be possible to go to some year where, with all the shortcomings and with all the struggles that the money as an income had entailed, there was gratitude, there was thanks, there was great propaganda among our people because we had kept up the standard at that time? I confess to you that I considered whether we could get out of the difficulty by taking, as it were, a standard year, a year that came up to that qualification and going by that standard year and various other things which we were doing—not only one thing, but various other things. But when I went into it, there
was a colossal change—simply a colossal change. Certain figures that were mentioned here the other day as having been considered by us, were figures that were produced at that inquiry—figures which within two minutes of their announcement were turned down by everybody and banished from their minds as being unjust and absolutely impossible.
Well, we come to the year 1929—[Interruption.] I would appeal to hon. Members because I know they want to be fair even if they want to be very aggressive. I ask them to try to put their imagination into operation and instead of feeling that they are sitting here today, 11th September, 1931, to feel that they are sitting here at the end of October, 1929, and that the state of the unemployed is as it was then. Think of that, measure it, get it into your minds, and then say that the proposal of the Government is this it is recreating that condition hut making it 1½ per cent. better. [HON. MEMBERS: "That is wrong!"] That is the position. There is another thing I must say. You will criticise the 26 weeks instead of 52 weeks as the insurance period. I think, if we were going into the Lobby on that, we would see alongside of us and in the same Lobby, a great many faces of those with whom we have always divided up to the beginning of this situation.
Then there is one point regarding transition benefit, and I want to make that clear also. Regarding transition benefit there was a great deal—I do not know how much, because a Cabinet works as a whole and not in sections. [An HON. MEMBER: "Does this one?"] I hope so. When it ceases to do so, we will cease to exist. Now this question of transitional benefit had been coming up and coming up month after month as a more and more pressing problem. It was only temporary—I mean the proposal, I do not mean the relief. It was just stuck on, as it were, as a temporary attachment to the Insurance Fund. It went on extending, and at the present moment you get great bodies of men and women who ought to be insured not insured, and their neighbours getting transition benefit and they themselves having to go to the Poor Law. All these are anomalies. It was decided that the insurance benefit should be 26 weeks, and then that some test of need—[Interruption]. I think
that is a very trumpery remark. My hon. Friend and neighbour in Durham, if he takes that into the Division Lobby, and if opinions expressed and commitments made are to direct the way that others' feet go, will not have a united Opposition voting. But the Employment Exchanges are the bodies that remain in control of these people. [HON. MEMBERS: "No!"] I am sure that if my hon. Friend has different opinions to express, he will give them. But the intention is that they should be, and that is how it will be done.

Mr. R. A. TAYLOR: May I ask the Prime Minister—

HON. MEMBERS: Sit down!

Mr. SPEAKER: The Prime Minister did not give way.

The PRIME MINISTER: I am perfectly willing to give way, but I ask the hon. Member to have the courtesy to allow me to finish what I am saying. I was saying that they are the subjects, to use that word, of the employment exchanges, but for the purpose of assessing what is fair, the machinery of the local assistance committees is going to be brought into operation. Their application is to be made to the employment exchanges. If any special regulations are necessary to be issued by the Ministry of Labour, then those regulations will be issued and will be accepted by the local authorities. The money they get will not be paid to them by the public assistance committees, but will be paid to them in exactly the same way as the insured man, in benefit, gets the money paid to him at the counter of the employment exchange.

Mr. R. A. TAYLOR: May I ask the Prime Minister whether these men on transitional benefit will be subjected to the same destitution test as those who now apply to the Poor Law for relief in respect of unemployment?

The PRIME MINISTER: I do not quite know what the hon. Member means by "the same destitution test." If the hon. Member has a specific point to put, and will be good enough to put it on the Paper, when his words can be carefully examined, so that I may not give him an answer to a very hurriedly constructed phraseology by himself in equally hurriedly constructed phraseology by myself, which will please neither him nor me—if
he puts one of those questions on the Paper, it will certainly receive careful consideration. Then there is the Road Fund. That has been accepted. There is no difficulty in administering it. It will mean a certain amount of slowing up, but no abandonment of any principle. So, apologising to the House for the longer time than I meant to take when I embarked upon this speech, I have the greatest pleasure in moving the Second Reading of the Bill.

Mr. CLYNES: I beg to move, to leave out from the word "That," to the end of the Question, and to add instead thereof the words:
this House, whilst recognising the necessity for preserving the country's finances on a sound basis, cannot accept proposals which will deprive masses of the people of necessities of life whilst others remain in the enjoyment of luxuries, and will aggravate unemployment by restricting the purchasing power of wage-earners; nor can this House approve the Second Reading of a Bill abrogating Parliamentary control by authorising the making of Orders in Council designed to supersede existing Acts of Parliament or reverse settled national policy without the previous specific assent of the House of Commons.
The right hon. Gentleman the Prime Minister necessarily took, for the purpose of submitting his Bill, a very large part of the time of the sitting, and I hope in perhaps half the period he took to offer, I will not merely say some, but a sufficient, answer on behalf of my hon. Friends behind me, for our feeling is that we have never witnessed a more melancholy performance from any Prime Minister standing at that box, and consciousness of the futility of the proposals and of the temporary, makeshift, and patchwork character of the Bill, has been exhibited in almost every line and sentence of the speech to which we have listened.
I must straight away correct, indeed repudiate, one definite statement of the Prime Minister. He could not speak for the Conservatives, though, of course, throughout his speech he was doing it, but he claimed to speak as a Labour man. I deny that, in anything he said, he spoke for Labour. He was singularly embarrassed in a job that was not to his liking. We have known him until recently as a House of Commons man; he is now an Order-in-Council man. Why
the House of Commons should have been called to deal with these problems is a little bit bewildering. It all might have been done by circular. Some pronouncement or declaration, without the trouble of bringing us together, might very well have attained the end which the Prime Minister has in view. This is more than an Economy Bill. It is a Bill to suppress the Opposition; it is to silence a minority, to make some mockery of Parliamentary Government, and I invite the Prime Minister, and particularly those who are now supporting him, to reflect upon the possibility of this example becoming a precedent, for we shall not always—indeed, I think not for long—be in a minority.
This disturbing and this revolutionary Measure may well be taken as fully justifying the drastic manoeuvres which a Socialist majority in a future Parliament will take to give effect to its will. It may be that before very long the people of this land may desire to have the land as national property. How much easier it would be to settle that matter by Order-in-Council, and to nationalise the mines and innumerable other public undertakings. We shall not forget the possibilities that lie ahead of us in following the precedent which the Prime Minister has set us to-day.
I regretted to hear the endeavour on the part of the Prime Minister, by insinuation and by implication, to associate those of us who sit on these benches with several of the proposals which he has now made; but I am certain that the House, if it does not openly admit it, will privately, in its own mind, agree that he had to retreat from the implications that we gave by sign or word any support whatever to the idea of taxation either of tea or sugar, and the same was true of his inference as to the proposals to reduce teachers' salaries. The Prime Minister, in a former utterance, made a statement which I would like to repeat and emphasise. He referred to the unfortunate propaganda which, for a considerable time in this country, preceded the condition of crisis which largely that propaganda produced. It was going on for a year or more. There was a Labour Government in office, maintained very largely in power by a sustained majority. That condition was disliked. We had the world economic crisis
to deal with, and yet every Tory platform rung with the utterances and every Tory paper was full of the declaration that the Labour Government were responsible for the economic conditions.
That was the cry designed to discredit the Labour Government—to bring us down by fair means or by foul. Instead of that, it was not the spirit of labour or the organised force of the Government that was destroyed. It was that there was created throughout Europe and in America a condition of such uneasiness and suspicion that bankers and financiers became afraid, and they assumed the character of dictating to the Cabinet under what conditions the Budget should be balanced, or in what regard economy should be effected. These cries had their result in a quite unexpected way. My right hon. Friend the Member for Derby (Mr. J. H. Thomas)—at least the right hon. Member for Derby for the moment—

Mr. ERNEST BROWN: He has been there for more than 20 years.

Mr. CLYNES: —at one time delivered a speech which might very well be described as his "down and out" speech—this country is not down and out—and that was to repudiate and to answer the repeated declarations of those who are now his political associates and friends. This country was not down and out. A proof of the stability, of the power of the financial resources, of the financial backing and foundation of the country, was adequately afforded in the utterance of the Chancellor of the Exchequer yesterday. The Prime Minister claims that he is doing what he is doing out of the promptings of patriotic duty. That was particularly emphasised in almost every utterance of my right hon. Friend and the Dominions Secretary. What right is there on anyone's part to claim this monopoly of patriotism? What ground is there for the claim that they are acting on behalf of the nation—they whose pockets are filled with demands from their constituencies for their resignation? Hon. and right hon. Gentlemen support them as if they are solely concerned for the national well-being. Is it that they are wholly disinterested from the standpoint of party and from the standpoint of business
men? Do we not see and hear evidence every day of a desire to capture the electors at a time when an appeal to the country will be most favourable to them? The search for victory lies behind these professions of national duty and of national well-being. I repudiate those repeated implications in the Prime Minister's speech that those of us on this side of the House had accepted, sanctioned and approved the various items to which he referred this morning.

Mr. W. J. BROWN: What about the Civil Service wages?

Mr. CLYNES: Even the Prime Minister on that point shows that it had no relation whatever to the question under consideration.

The PRIME MINISTER: Surely the right hon. Gentleman does not mean that. The fact of the matter was the thing would never have been raised at all had it not been for the economies that were under discussion at the same time.

Mr. CLYNES: The five point cut in the Civil Service wages was a settled matter according to a scale. I think it was found to be so. [Interruption.]

Mr. W. J. BROWN: rose—

Mr. SPEAKER: This Debate must be conducted by one speaker at a time.

Mr. BROWN: again rose—[Interruption.]

Mr. SPEAKER: These differences had better be settled outside.

Mr. KIRKWOOD: Things are being said that they do not want to hear.

Mr. CLYNES: An accurate account of our attitude towards the proposed economies was given in a brief speech yesterday by my right hon. Friend the late President of the Board of Trade, and anyone who will read that careful narrative as it appears in this morning's OFFICIAL REPORT will have the truth of what the position was. If I may summarise it, I will do so in these words—that the various items were in the nature of an economy or proposed Budget agenda to be finally decided in the light of a complete picture. That complete picture was never presented. [An HON. MEM-
BER: "You ran away!"] According to tradition or custom, individuals state their respective positions, and, if that had been done, I should not have shrunk from saying fully and truthfully what was my own position right from the beginning. But failing to reach agreement, and, more particularly, feeling the pressure of both the political and financial hands exerted upon us to reach certain conclusions, and being dissatisfied with the arguments and proposals behind them, we offered our resignations as the price of our freedom, and now claim that we are absolutely at liberty to take in this House in meeting the challenge such steps as we think it proper to take in the public interest. Accordingly, we lament the Prime Minister's arguments of this morning in support of the cuts in education, for such cuts will only further and more seriously handicap this country. [Interruption.]

Mr. SPEAKER: The right hon. Gentleman should be allowed to continue his speech without interruption.

Mr. CLYNES: Let me give to the House a few figures of what will have to be suffered by teachers under a cut of 15 per cent. Over 53,000 qualified teachers will receive less than £3 a week for their services; over 41.000 qualified teachers will receive less than 55s. a week; over 14,000 qualified teachers will receive less than £2 5s. a week—not a scavenger's wage—and 12,000 qualified teachers will receive less than—2 a week.

Mr. W. J. BROWN: That has been true of civil servants for the last two years.

Mr. CLYNES: I do not think that the well-being of civil servants would suffer by stating their case with fewer interruptions and in more sober and considered statements.

Mr. BROWN: rose—

Mr. CLYNES: The hon. Member will have his opportunity.

Mr. HORE-BELISHA: On a point of Order. May I ask whether your remark, Mr. Speaker, that the Debate should be conducted by one Member at a time meant to suggest that the right hon. Gentleman who is now addressing the
House should not show the same courtesy to allow a correction which the hon. Gentleman wishes to make as the Prime Minister showed?

Mr. SPEAKER: Whoever is in possession of the House has a right to form his own judgment as to whether he should give way.

Mr. BROWN: rose—

HON. MEMBERS: Brown!

Mr. CLYNES: Our view on the cut in the health services is that a lowered standard of efficiency cannot be good for the industrial or social well-being of our country. A contract with Government money is sacred. In the lightest and the airiest way the Prime Minister would vary or break a contract as between the State and its citizens. The conditions and remuneration of policemen, teachers, and men in various public services are now to be varied by Order-in-Council. Many of these men, it was said, helped to save the country in its hour of trial during the War. They will now be subject to the secret decisions of the smallest Cabinet of modern times. We cannot have real economy by reducing the buying power of the people, and we shall find very shortly these substantial reductions reflecting themselves in an increase of unemployment as well as in deepening distress among the more needy sections of the population. I read a day or two ago in a paper a letter casting humiliating terms, to which I would draw the attention of the House. This letter said, in effect, "I am to be subject to these economies. My salary is small, and it is to be smaller. What shall I do? I must economise in turn. I shall have to discontinue the use of my motor bicycle. Secondly, I shall have to discontinue the pleasure of the sweet that I commonly have taken at my dinner." [HON. MEMBERS: "Oh!"] His question was, and I will repeat it for the Prime Minister—"Who is to benefit from all that, and how?"
The more you lower these standards, the more you make certain a lower condition of depression and of employment. It is done to some extent in the sacred name of sacrifice—of equality of sarcifice. It is justified with the shallowest of all arguments, the argument that equality of
percentage reduction is equality of sacrifice. The class which will suffer most from these sacrifices and economies is, unhappily, the class which always suffers most, whatever the condition of the country may be. The greater the state of national adversity the greater their degrees of suffering and sacrifice. Who have been making sacrifices all along? Who, throughout these years of trade depression and lowering wages, have alone been enduring sacrifices? The wage earners; and in the main, of course, of all their class, the unemployed group of the wage earners. The unemployed, to the extent of many hundreds of thousands, did save the country in the years of the War. They are the last men on whom now we should try to save a penny.
The grim endurance of the genuine unemployed, and thereby I would indicate the general body of unemployed, should make a more effective appeal to the heads of even this Government than it has done. Perhaps they can stand this sacrifice. It would appear that we believe so, but is it fair to ask them? That is the question we ought to put to ourselves. We can afford a 10 or 20 or 40 or even 50 per cent. reduction, but the man with children whose family income may be less than 30s. per week cannot, in spite of what you say, afford the 10 per cent. reduction. That forfeiture means a deeper and deeper kind of sacrifice than ever. What is sacrifice? Many definitions may be offered, and I shall venture one. Sacrifice consists in having to do without something you need—not something you want, something you would like to have, something you can afford to give away; and I say that some millions of the workers of this country are hourly making sacrifices, when the test is what they need and what they are unable to get. Therefore, I submit, there is no justification for this Bill, that the late Government, had they been left as free agents, uninfluenced by party pressure and financial agencies, could have balanced their Budget with justice to the people, and with satisfaction to the nation; and in that spirit and with that deep conviction I move the Amendment standing in my name.

Earl WINTERTON: I—

Lieut.-Commander KENWORTHY: Hear, hear!

Earl WINTERTON: I thank the hon. and gallant Member for Central Hell (Lieut.-Commander Kenworthy) for the cheers with which he has encouraged me. I do not know whether those cheers are intended to be a consolation to me for not being a member of the present Government. If so, I would like to say to the hon. and gallant Member that somehow I feel that sitting on the Front Bench at some future time may be a less unattainable ideal for me than it is for the hon. and gallant Member. I should like to make some observations on what I consider are two or three main points which arise on this Bill. I will make a reference, first of all, which I trust will not be thought discourteous, to the very interesting discussions which have gone on across the Floor of the House between various Members of the late Socialist Government now sitting on opposite sides of the House. All I can say about those discussions is that Cabinet meetings in the late Socialist Government seem to have been very like the game of "Slippery Sam," consisting of endeavouring to "pass the buck" from one to the other. [Interruption.] Who had the buck? Well, only the future can say to whom the "buck" was effectively passed.
In regard to the Bill itself, I am speaking only for myself, though I should imagine that I am also expressing the view of many on this side of the House, when I say that in supporting this Bill, as I hope everyone on these benches will, we feel we are supporting a most, regrettable necessity. It is a necessity that had its origin purely and simply in the financial administration of the late Socialist Government. I have no hesitation in saying that the incompetency and recklessness of that Government were without limit; and they must always bear, and will always bear when: history comes to consider the financial circumstances of the time, a, very heavy responsibility; a responsibility which they share with every member of the Liberal party in this House except those who had the honour and courage to oppose the late Government. The only difference that now exists between the members of the late Government and those who are members of this Govern-
ment is this, that the latter, for reasons which everyone on this side of the House honours them for, have now decided, in view of the position which the ship of State is in, to man the pumps in order to salvage the ship, while the rest of the crew have taken to the boats to get away as quickly as they can. That is the difference between those who are members of or who are supporting this Government who belong to the Socialist party—and that applies equally to the Liberals—and those who formerly supported it. I speak purely in metaphorical terms in saying that I have always had a sympathetic feeling towards the penitent thief, and I can respect those who are doing their best to redeem the mistakes they made earlier.
I do not wish to go outside the limits of order on this Bill, but I must confess that if a foreign observer were to read what has taken place in Debates in this House during the last two years—what has been said on the subject of finance—and then note the state in which the country is to-day, he would really think the British people and the British Parliament had taken leave of their senses. I say again we can support this Bill and we can only support this Bill because we believe it to be a necessity, because it takes the place of what would be an even greater misfortune and danger to the State such as would have undoubtedly arisen had not this Bill been brought forward. For that reason I commend the Government for having brought it in. I commend their courage. Every Member of the Government, whether belonging to the Socialist party, or the Liberal party or the Conservative party, is taking his political life in his hands in bringing forward this Bill, and in doing so he is doing something which is an honour to our whole political system.
I am very glad to see the former President of the Board of Trade in his place. No one is more welcome than he in a discussion such as this. He wrote an article the other day, the clarity of which could not possibly have been exceeded. What did the right hon. Gentleman say? He said, in effect, that his party found themselves in a very desperate situation, and that they intended to "go while the going is good." The right hon. Gentleman said that he knew that the unpopularity through the passing of these
economical Measures would be transferred to the party in power, and that in a very short time everything that the Labour party had done would be forgotten and his party would be returned to power with a large majority.

Mr. WILLIAM GRAHAM: I am sure that the Noble Lord would be the last person to misrepresent, me. I summarised what I believed to be the inevitable Conservative argument, and this was endorsed by the right hon. Gentleman the Member for Epping (Mr. Churchill).

Earl WINTERTON: That does not make it any better. The right hon. Gentleman the Member for Epping (Mr. Churchill) said he was afraid that what the right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham) had said might be the case, but that did not make the action of the right hon. Gentleman any the less cynical. The Members of the late Government have got out while the going is good, knowing that by doing so they were going to transfer the unpopularity of passing economy Measures to other shoulders. The party opposite will then appeal to the country, hoping that the electors will have forgotten what has taken place during the last two years and hoping that the electors will return them by a majority, and then everything will be well. That may be so.
1.0. p.m.
I am going to say something which may not be popular, and it is that there is no limit to the follies of democracy. It is quite possible that the party opposite, as a result of the action which they have recently taken, may be returned with a majority at the next election. [An HON. MEMBER: "Never."] At any rate, that is a possibility, and I am facing it. What is the alternative of the party opposite to this Bill for dealing with the present economic and financial state in which the country finds itself? I have no hesitation in saying that if the Labour party tried to put into operation what was suggested at the Trades Union Congress and elsewhere they would eventually be faced with a situation in which there would be such a flight from the pound that it might be reduced by 50 per cent. of its present value and this might produce such a fury among the supporters of hon. Members opposite that they would find themselves faced
with an even worse crisis than that with which we are now dealing. [An HON. MEMBER: "They will never get in."] An hon. Member says that the party opposite will never get in, but I wish to face such a situation. The electors may believe the stories which will be told them by hon. Members opposite, but, even if they succeed in persuading the electors that black is white, that will not save them from the consequences of their colour blindness a greater disaster than the one with which the country is now faced.
On this side of the House we believe that on these great issues the facts are going to tell, and not the theories. We are prepared to face whatever disorder may occur and whatever attacks are made in the sure and certain knowledge that we have the facts on our side. The alternative policy to this Bill which is supported by the party opposite can only end by causing the disaster which we have so narrowly escaped. It is easy to delude the electors, hut it is not easy to elude facts, as the Opposition will find out very shortly. The introduction of the Economy Bill is a most regrettable necessity, because we all know that some of those proposals are of a very serious character, and we cannot ignore how serious the effect will he on the members of the public who will he affected by them. The Prime Minister said—I think it was a slip of the tongue—that he had pleasure in moving the Second Reading of this Bill. I do not think that any of us have any pleasure in supporting the Measure, but we do so because we think that it is the right thing to do. The Conservative party does not find any pleasure in supporting a Bill, the necessity for which could have been avoided but for the calamitous alliance of free imports and Socialism by the late Government.
The ex-Home Secretary said that the procedure adopted in this Bill might be applied by a subsequent Socialist Government and would be applied in every emergency. On that point, I agree with the right hon. Gentleman, because I view with some concern the carrying out of such vast proposals by means of Orders-in-Council. No doubt this Bill does create a precedent, but the only justification for taking that course, and it is a sufficient
justification, is the reason which was very clearly given by the Prime Minister in his speech, namely, that time is the essence of the contract, and it is essential to get these proposals through if the aim which we all seek is to be attained, namely, that of restoring confidence both in this country and among foreign lenders abroad. That is the only justification for this Measure.
For the last 20 years we have been governed in this country with regard to finance by a single-Chamber Government. Ours is the only country, with the exception of Greece, which has adopted financially a single-Clamber Government. I feel sure that when that system was introduced in 1911 it was never contemplated that 20 years after bringing in the Parliament Act not only would the House of Lords be deprived of the right to consider financial proposals, but this Chamber, which is entitled to discuss financial matters, would be shackled by such proposals as those which are to be found in the Economy Bill. Here we have a Parliament elected on the widest franchise that any House of Commons has been elected upon, and, under both the present Government and the late Government, we have had an amount of closured Debate that I have never seen exceeded in the 27 years that I have been in the House. We have had a closured Budget, and now we have this Measure. We are advancing rapidly towards a condition of things which was never contemplated even 15 or 20 years ago. [Interruption.] There is no party grievance in this case.
I agree with the great deal of what was said on this point by the hon. Member for Smethwick (Sir. O. Mosley), and sooner or later this House will undoubtedly have to face the fact that it will either have to provide itself with a new form of procedure and constitution, or to accept the position that more and more the executive of the day is controlling, not merely policy, but expenditure, and even the items and details of that expenditure. Meanwhile, the plain duty of all on this side of the House, if I may say so without impertinence, is to support this Bill, and in doing so, and thereby taking what we know to be an unpopular course, we shall at any rate feel a moral satisfaction which I cannot think is felt by Members of the late
Government sitting on the front Opposition bench, whose conduct in this matter, if I may put it very mildly, is at least open to some reproach.

Mr. LUNN: The noble Lord the Member for Horsham (Earl Winterton) is, perhaps, as candid in his remarks as any Member of this House. To most Members he appears to be very rude upon occasion in the way in which he offers his opinions to the House, but I am sure he will agree with me when I say that I have never before heard him allude to "my hon. Friends the Liberals." I have known him to hate Liberalism and Liberals, and the attitude which they have taken in this House at all times. We all realise that the Liberals who have now come into this Government never dreamed that they would be part of a Government. They are not there because of the will of the people. They have no authority from the people to be, so to speak, dictators, and, after all, this Bill is setting up a sort of dictatorship by a handful of men who have not any authority either from Parliament or from the nation. And the Tories who are in the Government are not there because of the will of the people. The people ought to be consulted in these matters, and we ought not to be handed over, as we are, to men who had no responsibility whatever to the people, and who are to govern, apart from Parliament, through the operation of this Bill, the destinies of the people of this country.
What does this Bill do? First of all, I believe, it will place a cut upon Cabinet Ministers with salaries of £5,000 a year, and the cut is to be £1,000. I listened to the Prime Minister the other day as he talked of his sacrifice of £1,000. I have known the Prime Minister for nearly 40 years, and there is no man whom I have reverenced more in that time; but I have known the time when a thousand pence in his possession would have been a fortune, and yet he has moved a Bill this morning in which, after those experiences, he is going to impose upon millions of the people of the country reductions in their standard of living which they cannot afford to bear. The Report of the Holman Gregory Commission stated that nine-tenths of the unemployment in this country was in the north-eastern and north-western parts of
she land. Lancashire and Yorkshire are the great sufferers. There there are scores of thousands of men and women out of work, not through any fault of their own. Willing and anxious to work for their livelihood, they only seek and wish for the opportunity. But the Chancellor of the Exchequer and the Prime Minister have preached for 40 years that, if we could not provide work, we must provide maintenance for these people, and I never thought I should live to see such a scene as I saw last night in this House. The Chancellor of the Exchequer, another of my gods for 40 years, who has been jeered and sneered at by the Tories on hundreds of occasions in this House, last night received their cheers, not because of the Budget he was introducing, but because of what he was imposing in that Budget and in this Bill upon millions of the most honest people that there are in this country. I hope I may never see such a scene again; I wish to God that I had never lived to see it, or that the Chancellor of the Exchequer had never lived to win those cheers. It was the most painful scene in my political life to see Philip Snowden go the way that he has gone.
What is to be the position? Where is the equality of sacrifice? It will still be as difficult to get a seat in the West End of London at less than 5s. 9d. in 20 theatres every night in the week as it is to-day, and yet you are calling upon the unemployed man and his wife and three children, who are now receiving something like 30s. a week, to suffer a reduction of 2s. 9d. in that amount. How is he going to live? How can he live? We know that he cannot provide the necessaries of life, he cannot prepare for the time when the opportunity will come for him to work again; and, more than that, in a few weeks' time he will be driven to the public assistance committee, which is the old Poor Law, and before very long, instead of the burden of maintaining the unemployed being upon the nation, where it should be, we shall see these local areas, which have tremendously high rates to-day in the North-East and North-West of this country—[Interruption]—have their rates increased beyond what they are at the present time. I, for one, will do everything in my power to oppose the imposition of such a position upon the people by this Bill.
Moreover, the Unemployment Grants Committee is to have its opportunities lessened by this Bill. It is not to be, able to disburse grants to the same amount, and the percentage of grants is to be reduced, so that, in the local areas where the authorities have been providing some work, and improving the amenities of their areas by that work, there is to be a stop, and we shall see an increased number of unemployed in most areas of the country by reason of what is to take place in connection with that particular matter. I think that one of the best things that was done by the late Government was the encouragement that it gave to local authorities, and the financial support that it gave to them to enable them to improve their areas and to provide many necessities that would not have been provided in the ordinary way. Further, this Bill attacks the health services. The Prime Minister passes that over as a mere trifle. I have seen grow up within recent years many aids to local authorities in order to decrease the death rate. I have seen infantile mortality, by reason of much that has been done in that direction, decrease tremendously during my public life.
The proposals in this Bill are to stop that sort of thing, and the policy of this Government is to send more mothers and more babies to the cemetery. That is the only policy that I can see in what they are going to do with regard to the health services. Then the leaders of this Government are going further to deplete the cost of education. They are going to reduce the percentage grants to local authorities, which means stopping local education authorities from building schools and from dealing with dilapidated schools or improving the equipment for the children; and then they are going to attack the teachers' salaries to an extent which I think is unpardonable on the part of the Government. Yet the men who are responsible, and the man who has moved this Bill this morning, I have heard on hundreds of occasions plead for an educated and an intelligent democracy. Where is the intelligent democracy to come from if you are to stop the progress in the opportunities of education of millions of our people and to create a dissatisfied teaching profession and to reduce them to a standard upon which they cannot do their work as well as we
expect that they should do? Knowing my own limitations so far as education is concerned, having had to work in a coal mine at the age of 12, I can never support any limitation of the possibilities of giving better education to the children of our land.
Further, I am astonished that they should attack police wages. After what happened outside this House the other night, I should have thought the Government would be warned. They ought to retain a comfortable, satisfied and diligent police force, and they are creating a disgruntled police force. I am confident that one of the things that will come out of this is an indifference to crime, and an addition to crime, as the result of what is being done, and we shall see that before very long.
I am sorry to see a Bill like this before the House. I never dreamt that I should see it from any Government of any complexion. Much less did I ever think I should see it moved by the present Prime Minister. I listened last night to the peroration of the Chancellor of the Exchequer. I have heard his peroration on a great England scores of times but I never heard it when it left out the idea that to have a great England you must have a comfortable and happy people. He did not say that last night. He knows that he is doing everything to provide discomfort and unhappiness. I hope and believe my party will grow and develop and that the people will understand what is being done. There can never be a possibility of a Liberal Government, and certainly the Tory party are going for long into the wilderness as the result of what they are doing to-day. I hope we shall go out and show the people what is being done and that there is no equality of sacrifice asked for. The only sacrifice that is asked for, for which there is no justification whatever, is asked of the millions of people who have always to bear the sacrifice and who never get compensation.

Mr. HARRIS: I believe the whole House will agree with the late Home Secretary in his dislike to legislation by Orders-in-Council. A Bill of this character is a bad precedent. It is drafted in very wide terms and gives very large powers to Ministers, although I understand there is this protection, that protests can
be made by Prayer, but it means that the House of Commons is vesting in the Executive very vast powers. The only justification for this Bill can be the existence of a crisis. We have had very long discussions in the last two or three days as to how far a crisis exists, but I think the clearest evidence of the seriousness of the situation is the assumption that the late Government did come to some agreement on cuts to the extent of as much as £56,000,000. [HON. MEMBERS "No!"] If the statement is denied, perhaps we shall have from a responsible Member of the Opposition a statement as to how much they were prepared to cut. I think the country is entitled to know not only how much they were going to cut but in what form. We know that in August, when one had reason to expect that they would be on their holidays, they were sitting day after day, even on Saturdays and Sundays, discussing how the Budget was to balance, but the proceedings were kept an entire secret. It is not much satisfaction to the country and the House of Commons to hear old colleagues correcting each other as to what took place in the secrecy of the Cabinet room. It would clear the atmosphere if a full and frank statement was made by the Leader of the Opposition.

Mr. LANSBURY: The hon. Member must know that any such statement as that could only be made with the sanction of the Prime Minister, and with the production of the Cabinet Minutes. Speaking as an individual, I am perfectly willing to agree, if the Prime Minister agrees, to tell everything that happened in the Cabinet and also to produce the Cabinet Minutes, but that is not for me to decide.

Mr. HARRIS: cannot enter into these personal differences between old friends.

Mr. LANSBURY: I only want the hon. Member to treat late Ministers as any other set of Ministers would be treated. If the Prime Minister gives us freedom in the name of the King to produce the Cabinet Minutes, I shall be quite satisfied.

Mr. HARRIS: The right hon. Gentleman has put the thing in a very fair
way and I think he is right. I think the nation is entitled to have the secrets of the Cabinet unveiled so that they can know exactly what happened, whether there was a crisis, how far it was due to the necessity to cut down expenditure if at all, whether emergency measures were required, whether it would have been necessary to call the House of Commons together in due course, and whether we should have had to resort to the drastic measures contained in this Bill. If, of course, there was no crisis, if it was all a mare's nest, if there was no emergency, if there was no danger of the flight of the pound, if we were really in normal conditions, why were the Cabinet sitting all through August, discussing possible measures not only of economy but of taxation? I am in rather a peculiar position in my attitude to the late Government.
I am one of those who were very much attacked because on many occasions I did not act with my own party but supported the late Government, and helped to keep it in office. I desired, in the interest of the country, that Labour should have a chance to develop their schemes, and carry out their policy. If the late Government could have agreed, if they could have formulated a policy and called the House of Commons together, and that policy had bean a fair and just one, I should have supported it, even against my colleagues in my own party, according to the particular measures proposed. They did not give me a chance. They did not give the House of Commons an opportunity. It was their elected leader, the present Prime Minister, who had been elected by them and had been their trusted leader for five-and-twenty years, and, if there had been a betrayal, it was their leader's and not my responsibility. They cannot get out of it. This is a Government led by a Labour Minister, assisted by the Chancellor of the Exchequer, who, at any rate, for a long time had the confidence of the Labour Government. It is a tragedy, after all the years of those associations, that there should be this personal venom, distrust, and suspicion. At least they might give the Prime Minister the respect of believing in the highness of his purpose and the honesty of his aims.
The late Government has gone, and the Government of the country must go on. A new Government has taken its place. There is a crisis, and the new Government is at least entitled to have a chance to develop its schemes. I agree that many of the proposals contained in the economy cuts are most distasteful. Any economy cuts of this or any Government are bound to be most distasteful. There are to be cuts, and the question now is whether those cuts take the right form and whether they can be amended, modified, changed or improved. As I understand it, the Bill is not a Measure enumerating various ways of carrying out economies, but merely gives the necessary powers. The proposals are outlined in the Memorandum. The proposed reduction of unemployment benefit is undoubtedly going to cause great hardship—make no mistake about it—everywhere, particularly in London. Thirty shillings for a family of four may be considered a small sum in many parts of the country, but London is probably hit harder than any other part of the country, because of the high standard of its rents. I speak from practical knowledge and experience.
I must impress this point upon the Members of the Government. I do not know whether, in the hurried attempt to deal with a desperate situation, they overlooked the fact that in many cases in London, and, no doubt, in other parts of the country, it has been found necessary to supplement the unemployment insurance benefit through the public assistance committees out of the rates. In many thousands of cases, in order to meet the demands of rent and so on, it has been necessary to supplement allowances. There is a serious danger in regard to a cut of this kind—at any rate in London—that part of the cast of maintaining a family at the minimum of existence may be transferred to the local rates. It is most desirable, before the scheme is finally formulated, that the local authorities should be consulted and their cooperation obtained.
I was rather surprised to find that the machinery of the public assistance committee was going to be put into operation in reference to uncovenanted benefit. The Employment Exchange functions on an entirely different basis, and, if it merely means that the unemployed will
be pushed off unemployment benefit and left to the tender mercies of public assistance committees, it ought to be made clear. The machinery which has been devised appears to be rather clumsy and not likely to operate quickly. It must lead to delay and difficulty if you have to have inquiries. If you have to make a cut, it is much more honest to tell the unemployed directly that you are making the cut in preference to doing it indirectly by a revenue tax or by any form of inflation. People think in terms of money, and they are not so conscious of the hardship brought about by indirect taxes on beer, or tobacco, or on the lines suggested by the present leader of the Opposition as a possible alternative in his speech at the Trades Union Congress at Bristol. If you have to do it, be fair and honest about it; do not camouflage it by tariffs or by inflation.
One of the things I dislike most in the May Report is the attack on education. That Committee was an emergency Committee. It was composed of very able and distinguished men, all of them with a financial bias because they were accustomed to commercial accounts. No doubt, in looking through the national balance-sheet they singled out education because they saw the enormous increase in expenditure upon education. They no doubt looked at it as an ordinary chartered accountant would look at commercial accounts. Without realising the human factor behind it and without a full comprehension of the history of education, they singled out education for particular attack. They were insufficiently informed, I believe, of the whole history of education. Before the War, or at any rate before 1918, education was regarded as an ordinary—I do not like to use the phrase—unskilled occupation. It was in order to bring education to the level of a profession that Mr. Fisher made a special appeal to the local authorities.

Lieut.-Commander KENWORTHY: After the War.

Mr. HARRIS: It was after the War, in 1918. He did this in order to obtain for the service of the children the very best brains and ability available in the country. The report of the Committee on Salaries in Elementary Schools appointed by Mr. Fisher when President of the Board of Education, says:
Teaching is, by common consent, a profession. …The efficiency of national education cannot, in our opinion, be secured unless all school authorities central and local treat fully qualified teachers in the elementary schools as men and women engaged in a liberal calling.
It was in order to implement that idea that the Burnham Committee was constituted to deal with the salary question. It is not fair and just to compare the present scales of salaries with pre-War scales, because the object of the Fisher Act and the Burnham Committee was to raise the whole standard of the teaching profession. You might as well compare an agricultural labourer with a doctor or a gentleman learned in the law. You might as well say that because an agricultural labourer receives only 30s. a week the fees of lawyers should be on the same scale. It has now been recognised that the status of the teaching profession has changed, that it has been raised to the level of a profession, and that salaries must be raised accordingly. I wish the President of the Board of Education in his very troublesome task the very best of luck. He has not come in under the best of auspices. I wish that his object had been to carry out some great scheme of educational reorganisation and reconstruction, but I am afraid that he is there for one purpose only, namely, to crib and to confine education. I know his temperament, his character, his history, and his bias. In the beginning of this Parliament he made a speech as the champion of educational progress, and a jolly good speech it was, and, therefore, I hope that he will not regard the suggestions in this memorandum as final.
I am not going into the discussion between the late President of the Board of Education and the Prime Minister. We have heard that there was a real intention, or proposal, of the late Government to cut down teachers' salaries, and that the May recommendations were to be taken as the foundation for that consideration. I have been in contact with the teachers for over a quarter of a century and no more public spirited body of people exists. They proved it in the War and have proved it in their social work. Their work is by no means limited to the school room or the time table, they are always prepared to give their services to the State. It is most important to
keep them sweet. They have an immense influence on society and particularly on the future generation. A discontented teaching profession is a danger to the State.

Mr. THURTLE: And to parties.

Mr. HARRIS: I think the interests of the nation are far more important than the interests of any party. The teachers are willing to bear their sacrifice with the rest of the community, but they claim that it should be on the basis of what has now become a phrase, equality of sacrifice. The percentage generally mentioned is 10 per cent., and I understand that Members of Parliament are to be asked to make a sacrifice of 10 per cent. of their salaries. If that percentage is to be the basis of the economy reforms it, should be applied all round and one particular profession ought not to be singled out for special attack.

Mr. MILLS: Will you agree that a Cabinet Minister with £72 a week should have a cut?

Mr. HARRIS: I do not propose to go into that argument or into the question as to whether Ministers of the Crown should have high salaries. They have very heavy responsibilities and very heavy expenses, and probably the right hon. Gentleman the late First Commissioner of Works will say that he is worse off now than when he first took office. A 10 per cent. reduction all round would probably make an appeal to the country if justice was being meted out all round, but the teachers feel that they have been singled out for special attack. New Zealand had to face a similar problem of a non-balanced Budget and they applied the principle of a, 10 per cent. all round reduction, which has been generally accepted. I know that my right hon. Friend the President of the Board of Education is not in the Cabinet and that all he can do is to make recommendations. This particular Bill is to enable the Government to effect economies. The teachers are reasonable people and if the President of the Board of Education was allowed to negotiate with them I have no doubt that he would be able to arrive at reasonable terms. I go further; the teachers are not the only partners in this matter. There are the local education authorities who engage them and pay their salaries—

Mr. EDE: Many teachers in rate-aided schools are not in the service of local authorities. They are under local managers.

Mr. HARRIS: I agree, but the largest partners are the local education authorities. The teachers are not the servants of the State. The Burnham Committee was a committee representing the teachers and local education authorities, and they came to an agreement after long negotiations. That committee is now really in session, and I do not see why it should not be called together and negotiations opened up immediately. I am told, but I am not in a position to give my authority, that if local authorities were brought into this business and consulted that a great part of the economies could be brought about for much less than the 15 per cent. reduction asked for in teachers' salaries. I know that there has been no time to consult anyone, but I would suggest that, although time is short and action necessary, if possible a few weeks may be allowed so that the co-operation of the teachers and the local education authorities might be secured. There is nothing like good will. Economies brought about by agreement are far more, effective and satisfactory than economies brought about in the teeth of bitter opposition.

Mr. BUCHANAN: Will the hon. Member apply the same principle to the unemployed?

Mr. HARRIS: I have said that 30s. a week is little enough. You cannot justify any economy on the ground that the wage is too high or that they can afford any reduction, you can only justify it on the ground of national emergency. The teachers are on a different basis. They have a complete organisation, the local authorities have the machinery, and if the Burnham Committee could be brought into operation much of the present opposition could be met by reasonable concessions. I am thinking far more of the children than of the teachers.
There will be hardship among the teachers. They have made commitments. Many of them are buying their own houses. They are liable for mortgages, and they have other liabilities which they have incurred. Most of them have sent their children
to secondary schools, where they have to pay fees, and I know that those fees have been increased. It is difficult for them. While I want justice for the teachers, I want that justice for the teachers more in the interests of education. You cannot divorce the child from the teacher. We always think of education as an abstract subject; but buildings are of far less importance than the persons who teach in them. If you have a discontented teaching staff, if you have teachers who in the morning go to school not thinking of the lessons to be taught to the children but how they are to meet; their liabilities, the whole service of education will be disorganised.
Therefore, I make an appeal to my right hon. Friend—I know it is an appeal to willing ears, and I know where the right hon. Gentleman's sympathies lie—to approach these proposals of mine sympathetically. We are told that the sins of the fathers are visited on the first, second and third generation. We do not want the example of what happened in the Great War to be repeated in the next generation of children. During the War the teaching profession was disorganised. Men went overseas to fight, and the school children in the years 1914–1918 undoubtedly suffered. We do not want the child of 1931–1932 to suffer because of discontent and disorganisation in the teaching profession. Therefore, if by negotiation and by using the machinery of conciliation, we can bring about peace, goodwill and co-operation in this great national crisis, we shall he doing a great service not only to the teachers, but to the education of the child.

Mr. BROCKWAY: I have felt very great sympathy for the hon. Member for South-West Bethnal Green (Mr. Harris). One has known his enthusiasm for the cause of education for many years, not only in this House but on the London County Council; but one is compelled to point out to the hon. Member that although the first speech which the present President of the Board of Education made in this Parliament was in favour of educational development, the major speeches and the major enthusiasm which the President of the Board of Education made and showed when he was on the Opposition benches as a Liberal, were not for education but for economy.
It was largely due to his attitude and to the attitude of the Liberal party, of which the hon. Member for South-West Bethnal Green is a Member, that the May Committee came to be appointed. It was appointed as a result of a Motion from the Liberal party. It was appointed as the result of the peculiar pressure which the Liberal party could make upon the Labour Government. Therefore, I would say to the hon. Member for South-West Bethnal Green that he may retain his enthusiasm for education and for social reform, but the attitude of his own party has been largely responsible for the proposals which are now before the House for cutting down the educational grants, the salaries of the teachers and the expenditure upon social reform.
I did not, however, wish to speak in a controversial spirit so far as parties are concerned. I want to deal with the proposals in the Bill and the White Paper. The legislation which we 'are now considering is panic legislation, and, like all panic legislation, it is bad legislation. It deals with an isolated incident in a general situation in such a way that it will make the general situation worse. For the last two or three years there have been repeated appeals from those with whom I have been associated for a bold and deep policy which would deal with the whole industrial situation. We saw the position growing worse and worse. We saw unemployment increasing. We saw the standards of life being reduced. We saw industry after industry collapsing. We saw the trade balance going against this country.
Again and again we raised our voices in warning. We urged that this country was faced with a general industrial collapse and a general economic collapse, and that unless fundamental changes were made, by a bold policy, in our industrial, economic and financial systems, we were certain to reach the crisis which we have now reached. Again and again I remember the hon. Member for Bridgeton (Mr. Maxton), sounding the warning that a moment of crisis would be reached in which there would be resort to panic measures, and that it was infinitely better to build and construct before that moment of crisis was reached, rather than to allow the conditions of collapse
to go worse, deeper and deeper, and then resort to panic legislation. If any Measure justified that warning by the hon. Member for Bridgeton, it is the Measure now before the House.
May I deal with the issue embodied in this Measure? I need not repeat the dominant fact that this Bill has been introduced at the command of great financial interests, that it has been introduced by a Prime Minister who, in name, is the Prime Minister of this country, but who in actual fact is the servant of the Bank of England, and that the director of that bank is the real Prime Minister. It has been introduced by a Prime Minister who claims that this is a National Government. It is not a National Government. The very fact that the largest party in the State is not supporting the Government, is proof that it is not a National Government. It is in reality a bankers' Government. and it is merely carrying out the interests of the financial classes. The Prime Minister stands at the head of a coalition of Liberals and Conservatives. It is not in reality a coalition of Liberals and Conservatives but a coalition representing the financial interests of the cities of London, Paris, and New York, and the legislation which has been introduced to-day is the legislation which is commanded and demanded by those financial interests. It is legislation demanded by those financial interests because they see that if the standard of the working classes is not reduced the standard of the financial interests must be reduced.
We have to-day reached a perfectly clear issue in the struggle between the working-classes and the financial classes of this country as to which is to have the greater share of the national income. What has happened here has been merely a repetition of what happened in Australia where, when the interest to be paid On Government loans was threatened, the Bank of England demanded that the standard of life of the people of Australia should be reduced by 20 per cent., and threatened that if that reduction was not made they would ruin the industry of Australia. That has been the situation here. It is because the financial interests of this country fear that if the standard of the working-classes is not reduced, their share of the national in-
come may be reduced. That is the real heart of the situation, and that is why they have insisted on this legislation.
In that connection I would point out that, while working-class standards have been steadily falling, while even the standards of the professional classes have been falling, the standard of that financial class and that rentier class has been raised continually. In 1924 the proportion of the national income which that class took was 26 per cent. This year it is 35 per cent. The real brutal truth about the legislation which is now before us is the fact that these financial classes are determined to maintain that exploitation of the community, and in maintaining it they are going to drive down the standard of life of the unemployed, because they know that when they have once driven down the standard of life of the unemployed, they will be able to drive down the standards of the rest of the working classes.
But even though the legislation is of that character, I think an examination of it will show it to be absolutely futile, even from the point of view of those who are behind the banks, the great financiers, and the present economic system. These proposals are bound to make the industrial situation of the country worse. They are bound to increase unemployment. They are bound to intensify the tendency towards industrial collapse. The root of the industrial situation during recent years has been that production has been easy but the power to consume has not been there. That has been admitted in speech after speech, not only from our benches but from other benches as well. I remember the right hon. Member for Epping (Mr. Churchill) using the words that the problem of the present time is to relate consumption to production, and that until that gulf was bridged we were to go deeper and deeper down to industrial collapse. Instead of this Bill bridging that gulf, it will make the gulf deeper and wider. It will mean at once that there is less expenditure, less purchase of goods by the 3,000,000 unemployed. It will mean less expenditure by the large teaching class, the police force and the defence forces, and it will not only have that immediate result, but, as everyone knows, that result will find expression in attacks upon wage standards and in reductions of wages which will still further decrease consuming power. Every argu-
ment which the Prime Minister put forward to-day in favour of these reductions is an argument which the employers will be able to repeat in their negotiations with the representatives of the workers. That is not only the view of those of us who are Socialists; it is the view of other economists who are not facing this problem from the same point of view as ourselves.
I noticed an article by Mr. J. M. Keynes in the "Evening Standard" of last night, in which he used words that ought to be taken in mind by every Member of this House. He said:
The moral energies of the Elation are being directed into wrong channels, and serious troubles are ahead of us unless we apply our minds with more effect than hitherto to the analysis of the real character of our problems.
The exclusive concentration on the idea of Economy, national, municipal and personal—meaning by this the negative act of withholding expenditure which is now stimulating the forces of production into action—may, if under the spur of a sense of supposed duty it is carried far, produce social effects so shocking as to shake the whole system of our national life.
There is scarcely an item in the Economy Programme of the May Report—whether or not it is advisable on general grounds—which is not certain to increase unemployment, to lower the profits of business, and to diminish the yield of the revenue; so much so that I have calculated that economies of £100,000,000 may quite likely reduce the net Budget deficit by not morn titan £50,000,000, and we are just hoodwinking ourselves (unless our real object is to pretend to balance the Budget for the benefit of foreign financiers) if we suppose that we can make the economies under discussion without any repercussions on the number of the unemployed to be supported or on the yield of the existing taxes.
2.0 p.m.
The immediate effect of the legislation which we are considering to-day will be to drive the total of 2,800,000 unemployed up to 3,000,000, that we can not see the end of that process, that the total will probably grow from 3,000,000 to 3,500,000 and 4,000,000, and that then this crisis will recur. All that you are trying to dc now is to make a futile attempt to deal with an incident in a general process of collapse, and in doing it you are actually hastening the process of collapse.
Having made these general remarks, r want to turn my attention to the particular proposals now before us. I cannot find language to characterise the
proposals which are made in this White Paper for dealing with the unemployed. It ought to be enough to read to the House the proposed rates of benefit to be given to unemployed persons. A man is to live on 15s. 3d. a week, a woman on 13s. 6d., an adult dependant on 8s., and a child dependant on the miserable pittance of 2s. That is to say that a man and wife and two children will have to live on 27s. 3d. a week. The point has been made already that with rents as they are, and especially as they exist in London, these unemployment benefit rates mean actual hunger, actual want, for men and women and children. I take the case of my own -constituency: I know that there rents of 12s. 6d. 15s. and 18s. a week are being paid. I know that even those who are in the desperate position of being unemployed are compelled to take two rooms, or it may be one room, at rents of 0s. and 10s. a week. How is it going to be possible for an unemployed man to feed his family upon the rates of benefit which are to be given?
I want to appeal, if I can, to the actual experience of life of right hon. and hon. Gentlemen opposite. They know very well that they will spend upon one meal as much as they are going to vote in this Bill to a man to maintain his life for a week. I was asked in this House last night to attend a dinner which would have cost 6s. per person attending it, and that is the normal natural amount to pay in this House for these special functions. Six shillings on one meal—but you are going to give the unemployed man 15s. 3d. on which to maintain his existence for a week and if he is married and has two children you are going to give him 27s. 3d. a week to maintain that family. It is indecent, it is inhuman, it is unsportsmanlike; it ought to drive a sharp knife into the conscience of every mail and woman who spends each day more than he or she proposes to allow to the unemployed man to maintain his family for a week.
I emphasise that point, because the Prime Minister has said that this is merely a reduction in proportion to the reduction in the cost of living. That statement overlooks the enormous importance of rent, but, more than that, many of these unemployed have been unemployed for from two to five years and
during those years their savings in cooperative societies and in other ways have been cumulatively destroyed. During those years they have been living under conditions of privation. They are the victims of our economic system, of wrong policies in this House, of the failure of this House to deal with the industrial position before that position reached a crisis. To say that they will be one and a half per cent. better off, according to the index figure, than they were four or five years ago is an indecency so shocking that it would be impossible for me to characterise it in terms which would he allowed in this House.
I wish to direct particular attention to the proposals regarding transitional benefit. The Prime Minister said that those on uncovenanted benefit would still he paid from the Employment Exchanges. It is not the point at which they are paid which matters; it is the manner in which they are paid and how much they are paid. The fact is that a man who is unemployed for 26 weeks, at the end of that period will go entirely into the hands of public assistance committees. He will be at their mercy and will have to go through their investigations, and will have applied to him the destitution scales now applied to those who have to seek public assistance. That is a scandal, a shame and a disgrace. It is an outrage upon 'millions of men who are as good as any man in this House. Any Member of this House who votes for these terms for the unemployed, is acting in a way which, again, I am not going to describe.

Mr. E. BROWN: Will the hon. Member join me in attempting to get the assent of his right hon. colleagues to the publication of the minutes of their proposals, made to the all-party conference?

Mr. BROCKWAY: I say straight away that I am perfectly sure than I am voicing the determination of the Labour movement, and, I add this—that if it is found that leaders of the Labour party either on that committee or in the Cabinet have not withstood proposals for the reduction of the standard of life of the unemployed, or other sections of the working class, the hon. Member for Leith (Mr. Brown) can be perfectly sure that the Labour movement will deal with those leaders.
I turn from consideration of the unemployed for a moment to the proposals in this White Paper for reduction of salaries. The Prime Minister admitted that in relation to the teachers, the police and the defence forces, a breach of contract is going to be committed—a breach of contract as far as the public servants are concerned. Yet there can be no breach of contract with the bondholders, with those who have loaned money, those who have deen drawing interest. I think we are, making a great mistake in attempting to distinguish between the income which the public servant receives, and any other incomes in the community. The income of every man and woman in the community comes by national effort from a national pool and from national wealth, and the teacher or the policeman who is serving the community has just as much right to call upon that national wealth as any other individual, even though that individual is not employed by the State or a public authority.
We say again that if you are faced with a situation like this, you ought not to cut the salaries, here and there, of those who are already receiving low incomes. You ought to look at the national income as a whole, and if there is any necessity to economise on salaries and incomes at all, then economise by the method of the limitation of the maximum income allowed to any individual in the community. Facing the kind of crisis which we are now facing, we ought not to reduce teachers' salaries which are already less than £3 a week. We ought to say that in such a situation no individual, whatever his position, should be allowed a salary of more than £1,000 a year, and the amount over that should and could go to help the nation in the crisis with which it is faced.
The right hon. Gentleman the Member for Platting (Mr. Clynes) dealt with the details of teachers' salaries, and, therefore, I need not emphasise that point, except to say that they have already suffered a reduction of 121 per cent. since the Burnham scale came into operation and if this 15 per cent. reduction is now imposed their total reduction will be 27½ per cent. which is nearly one-third of their salaries. Many of us have received from our constituencies letters from teachers. I have a letter from a teacher who points out that she is an
honours graduate of the London University and holds the teachers' diploma of the London University and has taught for six years. Her salary is £180 a year from which 5 per cent. is deducted. The proposed cut will reduce her salary to £144 a year minus the 5 per cent. deduction for superannuation. That girl before she entered the teaching profession had to undergo four years' training. She had to graduate with honours and get her teachers' diploma, and yet after that it is now proposed that her salary of £180 a year should be reduced.
The proposals of the Government are going to put very disagreeable duties on the police this winter, and they ought not at such a time to be reducing their salaries. So far as the Defence Forces are concerned, T would abolish them tomorrow if I could, but if the Forces are going to remain, there is no duty by the community which is greater than seeing that those who have to do that kind of task for the community shall be properly paid in return for their labour.
Finally, I have always been one of those who have desired that developments in this country should be constructive, orderly developments towards a new state of society, but I regard the Measure which has been introduced to-day as the first blow in a revolutionary situation. I regard the Measure which has been introduced to-day as an indication that we have here a similar kind of dictatorship to that which is now in existence in many European countries, and that just as on the Continent you have had national Governments developing which have begun to ignore the methods of democracy and of Parliamentary procedure, so this Bill means that that kind of era has been entered in this House of Commons.
As we look at the condition of the country, as we see the number of unemployed growing, as we see the attacks on wage standards, as we see the growing industrial collapse, then in the country itself a revolutionary situation is likely to occur, and the Government, in the action which they have taken to-day. have started this country upon a new course of development, and our opposition on this side is not only going to be opposition on these Parliamentary benches. We will do our utmost to organise in the country
the working-class, to strengthen their industrial movement, to resist the wage cuts which are certain to come, to organise the unemployed, to create there a mass movement, so that we shall not only be able, when an election comes, to win power here, but we shall have behind us in the country a power and a force which will enable us to see that that kind of legislation shall be carried out.
I say frankly that in that situation, when it comes, the old kind of policies which have been pursued politically by the Labour party will be absolutely in adequate. In that situation it will not be a matter of introducing this little reform and that little reform; it will be a situation of using power by the working-class and using that power to carry through the change from Capitalism to Socialism. When we approach that situation, the legislation which has been introduced from the Government benches to-day will be of very great value. Orders-in-Council can be used for the kind of proposals which are now before us. Orders-in-Council can be used for the nationalisation of the banking system, can be used for the nationalisation of land, can be used to determine that we shall control the economic and financial system for the working class, take it from the hands which now possess it, and use it for the mass of the community. That is the significance of the legislation which has been introduced to-day, and when the moment of crisis comes the lesson which has been given to us by this Government already adopting Fascist methods will not be forgotten in the ranks of the working-class.

Lord EUSTACE PERCY: Perhaps the hon. Member who has just sat down will forgive me for saying that the concluding portion of his speech was an excellent instance of why we, on this side of the House, and those, the great majority of this country, whom we represent in this House, are not afraid of revolutionary threats, because the hon. Member, as lie explained with wild and whirling gestures, exactly how drastic a revolution they intend to carry out, concluded by saying that that revolution would adhere strictly to Parliamentary precedents fixed to-day. That is the attitude of mind which goes for revolutionary fervour in this country.
[An HON. MEMBER: "Do you want force?"] One hon. Member opposite asks me whether I want force. I do not, but make no mistake about it that if other parties in this country do want force, we are prepared to meet them. I think there has been too much in this House to-day of speeches which remind one of the dictum of the psycho-analyst that speech after all is only a transmutation of the primitive instinct to bite.

Mrs. MANNING: Not a nice man to know!

Lord E. PERCY: I do not propose to follow that example. I want especially to address myself to the question of education economy. Any proposals involved in this Bill for education cuts must, I think, be put in relation to the general principle of this Bill. It is no doubt an emergency Bill, but emergencies arise out of disregard of sound principle, and emergency legislation must be based on sound principle, and this proposed Measure proceeds on a principle which I think has been too often forgotten in many quarters in this House, and that principle, I take it, is this: It is a very old and a very elementary principle of political economy that at periods when and in countries where the rate of accumulation of capital is slowing down, expenditure and investment should, so far as possible, be directed not into long-term investments, not producing a return for a number of years, but, so far as possible, into objects of expenditure and investment which produce and earn a return.
I know there are in many quarters of this House hon. Members who suppose that any form of expenditure or investment will contribute to that revival of productive lending and spending which the Macmillan Committee advocate. They suppose that any investment, any expenditure on roads or education or whatever it may be, is bound to produce that kind of revival, whereas I do not doubt that if, at a time when the rate of accumulation of capital is slowing down, you direct a large proportion of your wealth into long-term, lock-up investments, the result is not an inflationary effect but a directly deflationary effect.
That is the fundamental explanation which I would recommend to the hon.
Baronet the Member for Smethwick (Sir O. Mosley). That is the reason why the public works policies of successive Governments in recent years have broken down. In the present constitution of society, public works are invariably long range investments, except with the single exception possibly of the Post Office. The result is that all your efforts to direct a larger and larger proportion of the decreasing emoluments of the capital of this country into long-range works of that kind have resulted in no decrease, but, possibly, in a positive increase of unemployment. That applies, unfortunately, to education. Education is a long-term investment, and the better the education the longer term investment it is. It is the attempt, very often, to produce a good scientific research worker without any background of liberal education which results in many of our disappointments to-day, and education is, therefore, in proportion as it is good education, a long-term investment.
But I want to submit to the House that education is the one long-term investment which it is most difficult to give up in times of decrease in the rate of accumulation of capital, for when you are asking the country for sacrifices you are, after all, asking them fundamentally for sacrifices for the next generation, and if you are making an appeal to this country, such as the Government are making to-day, and quite rightly making, and will have to make with increasing force in the next few weeks—if you are making an appeal to all classes to make sacrifices, in the Prime Minister's phrase to "tighten our belts," the appeal which will produce that sacrifice is that thereby you are preparing a better future, for the next generation, and that the son of the unemployed workmen in this country will have, through the educational system of the country, the prospect of a better status, better wages and a better career than he has had himself. A great proportion in any case of unemployment to-day is what is known in America as technological unemployment. These men have been turned out of work for the very reason that industry is being adapted to new methods and that as a consequence of these methods the worker in industry in the future will have a better chance, a less purely manual status than he has had in the past, and educa-
tion, as is admitted by every business man, has a great part to play in fitting the next generation for bearing that increased responsibility which the management and the conduct of industry in every grade will require. That is why the education economies proposed by the Government are the most difficult to make. Let us not forget that the May Committee's report is not the only report of businessmen that we have had on this subject in recent weeks. We have had the report of Sir Francis Goodenough on Education for Commerce and Salesmanship which urges a better education than we have given in the past on that subject, and therefore it is above all necessary that any policy of economies in education should not be merely a stopgap policy of cutting down, but should be a policy of constructive economy. I believe that it is possible to make economy a constructive policy and not merely a stopgap policy.
Let us consider for a moment what are the education economies proposed. They fall, roughly, into two classes, first, the restriction or re-distribution of education grants to local authorities with a, view to limiting the liability of the State for education development, and, secondly, a reduction in teachers' salaries. Dealing very briefly with the first point, I wish to suggest to ardent supporters of education, of whom I think I am one, that this economy may very well mean the beginning of an absolutely necessary period of coherent development in education. The Prime Minister to-day referred to the confusion governing the legislative work of the Departments, and he was quite right; but one of the most drastic cuts proposed in this Department of education economy is the abolition of the 50 per cent. minimum of grant was not the result. of confusion. It was the result of a deliberate sinning by this House against the deliberate recommendation of an expert commission. Hon. Members opposite who talk about a scientifically planned society should remember how often they are responsible, purely owing to political considerations, for upsetting the plans of the experts they call in. The Commission which, before the War, dealt with the question of the distribution of grants to local authorities recommended that if you were to get a proper distribution of grants so as gener-
ally to compensate the poor versus the rich local authority all up the scale, your minimum should not be 50 but 40 per cent., and this House deliberately rejected that recommendation.
That is only an instance of what is true throughout the percentage grants system that our need in education to-day is coherent development in certain directions. We have got to direct our policy at certain main points—the reorganisation of the elementary school for instance, and the application of applied science to higher education; in other words, technical education. You ought to be concentrating on these subjects, but every administrator of education knows that the reserve power which ought to be in his hands directed to development of that kind is always leaking away in a variety of minor directions, and especially it is leaking away owing to the action of the richer authorities who can afford to spend more from the rates, and, therefore under the 50 per cent, minimum, drag more and more money out of the grant system. I came very clearly to that conclusion, and I announced it, but I was beaten, as hon. Members will remember, because I think that I put forward my proposals in the most tactless way I could. I should not have put them forward in precisely that form if I had been a year or two longer at the board. I have long come to the conclusion that you will not get any coherent development in education until the State assumes more control over the reserves which are necessary to secure development. I agree that these economies, drastic as they may be, may very well be the beginning of a more coherent system of education finance if the Government take the opportunity of using them for that purpose.
In speaking of teachers' salaries, may I brush aside at once the May Report and 9/10ths of the propaganda which has been issued in the last few weeks in reply to that report? The hon. Member for South West Bethnal Green (Mr. Harris) was right in saying that the May Report was in some respects ill-informed, and it has provoked replies which I think are equally indefensible in various ways. May I state what I understand the position to be? This country after the War deliberately undertook to raise the teaching profession from what
it had been so far as the public service was concerned—a service of State employés hired to teach children who were compelled to go to State schools, and to raise the profession in the public service to the status of a learned profession, and to bring it into the closest relation and correspondence with the teaching profession, not employed by the State, in public schools, in private schools of various kinds, and in universities It has been one of the most encouraging signs of the past few years to see the extent to which the teaching profession in the independent and State administered schools has become more and more a common unity with a common ideal and common standards.
The State, in attempting to do that work, arrived at what is commonly called the Burnham Agreement in 1921. That agreement was independent of the index of the cost-of-living figure for the period of the agreement. The agreement ran out in 1925. In 1924 there were negotiations for a revision, but they broke down, and as a result there was arbitration. During that period in which the teachers were entitled to be secured from any reduction owing to the cost of living, two cuts were made—one of 5 per cent. voluntarily given up by the teachers, and one of 5 per cent. as a contribution to a contributory pensions scheme. That situation was considered by Lord Burnham—surely a gentleman not suspected of being hostile to the teaching profession—in his arbitration of 1924–25, and he gave an award reducing the teachers' scales of salary on an average by another 2½ per cent. I submit that we should not go beyond the 1925 award. That award ought to he regarded as a judgment on the various conflicting claims of teachers, local authorities and others under the original Burnham Agreement. The 1925 award, I affirm, was broadly speaking representative of the proper level of teachers' salaries at that time.
When members of the teaching profession talk about the independence of the Burnham scale of the cost of living, I should like to say this. It was deliberately intended that this 1925 award should last at least six years independently of what might be the cost-of-living index figure, but it was never intended, and it was never claimed on either side, that
at the end of that six years if there had been a real fall in the cost of living, these scales should not be revised. Now there has been a catastrophic fall in commodity prices and a catastrophic rise in the value of the pound sterling. The situation is complicated, and all wage negotiations throughout the country are complicated, by the existence of a cost-of-living index figure which is a crying absurdity. It was based 27 years ago on a survey of less than 2,000 working-class families. It hears very little relation to working-class standards of living, and no relation whatever to middle-class standards of living. The result is that you have the chaos of wage scales that you have in this country in different industries. When hon. Members opposite are prepared to die in the last ditch for the Trades Union Congress, I wish they would remember that the fixing of wages since the War has been more in the hands of the Trades Union Congress than any other body, and the result has been this chaos of wage scales which does not correspond to the prosperity of different industries nor is any proper criterion, but is just the result of the bargaining power which may attach to particular unions and to particular persons.
In these circumstances, I must say one thing more. It is perfectly clear after that catastrophic fall in commodity prices since 1924—it was perfectly obvious in 1929—that a revision of the Burnham scales was necessary, and the local authorities before I went out of office were considering giving notice for the termination of the Burnham Agreement. I think that at my request and my advice they refrained from giving notice, for this reason. I agreed with them that it was impossible to postpone longer a reconsideration of the scales in view of this catastrophic difference in price levels, but I was very anxious that reconsideration should not take place until we had a fundamental revision of the whole structure of the scales which are unsatisfactory under present conditions. On that understanding, notice was not given. Since 1929 the alteration in price levels has been even more catastrophic, but what did the late Government do in the whole of those two years to secure any reconsideration of or added security to the teachers' salaries scale? They let the whole thing slide. They and the
National Union of Teachers joined in a mad hunt for two years to raise the school-leaving age and to force local authorities to spend more and mere money.
The whole question of setting the remuneration of the teaching profession on a proper basis by a fundamental revision of the structure of the scales and settling the reorganisation of education, has been left on one side. The result is that which we now see, that the Government which has got to introduce some order into this chaos of wage and salary levels, has fixed upon a figure of 15 per cent. [An HON. MEMBER: "Shame!"] This Government fixed on it, and the late Government apparently contemplated it with at least equanimity. We all know what really happened during the period of the late Government in the matter of teachers' salaries. We know through all these exchanges across the Floor of the House what happened just before the fall of the late Government; and these denials and disclaimers of responsibility do not impress anyone. This 15 per cent. cut can, I believe, be statistically justified on the cost-of-living index figure, going no further back than 1925, and taking the 1925 salary level as the proper salary level for the teaching profession.
Nevertheless, we all know—the Government know—that such a sudden reduction is a severe blow, a very severe measure to the teaching profession. I am not going to appeal to the Government for any reconsideration of it. I believe that, as things stand, it is necessary. You can no more alter it than you can alter orders for a battle sue hour before it opens. You cannot change the parts of a coherent scheme of this kind. But I do appeal to the Government to take up the work which the late Government so deplorably neglected, the work of, in conjunction with local authorities and teachers, working out a coherent scale of salaries for teachers which can really stand criticism, and distributing this aggregate 15 per cent. cut in the best way possible over really scientific scales.
That is the only thing the Government, can do at the present time. I appeal to them to take up that constructive work which the late Government so deplorably neglected, until the late Government
themselves, having allowed the National Union of Teachers—the teachers—to carry on for two years in the comfortable assurance that there was a Labour Government in office who would never do anything to them at all, suddenly woke up one morning to say that teachers' salaries would have to come down 20 per cent., or, on second thoughts, possibly only 15 per cent.; to say, "We are in a hurry, we forgot all about it for two years, but we have made up our minds now." That is the real history, and I appeal to this Government to take up the constructive task which the late Government neglected.

Mr. T. JOHNSTON: In my view, the House cannot properly consider the Measure before it to-day unless it pays some attention to the proximate cause of that Measure. We have been repeatedly assured by all sorts of Press editors that no Government ought to have any right of interference with the financial operations directed from the Money Market. We have been repeatedly assured that it would be disastrous in the interests of the nation that the politicians, the statesmen, the House of Commons should have any rights of interference with the operations of those who control our present system. We have been warned "Hands off," and I want to draw attention to the results of that policy. I do not refer to such incidents as the Hatry collapse and the millions lost there, but I will call attention to the definite conclusions of the Macmillan Report, in which we are told that City of London finance has utterly wasted since the War the whole of the resources that the Chancellor of the Exchequer now requires. In the year 1928 the City of London floated 284 companies, for which the public subscribed £117,000,000 of capital, and by May, 1931, the total market value of the investments was only £66,000,000, a loss of 47 per cent. of the money invested. [An HON. MEMBER: "Depreciation, not loss."] I am coming to that. Out of the 284 companies, 70 had been wound up, and the capital of 36 others had no ascertainable value whatever. [An HON. MEMBER "This Government interference."] There was no Government interference. When Austrian banks began to collapse—the Credit Anstatt, the Dresdner Bank—there came also the
chaos in Wall Street. Lord Beaverbrook assured us in the last issue of his Sunday organ that our financiers here were getting foreign bank balance money at, 2 per cent. and lending it at as high a rate as 8 per cent. [HON. MEMBERS: "That was disproved yesterday."] I said lending it "as high as 8 per cent." There was some money at 8 per cent. I am not saying it was all borrowed at 2 per cent. or that it was all lent at 8 per cent.

Lieut.-Colonel Sir FREDERICK HALL: Why try to mislead?

Mr. JOHNSTON: Money was borrowed, brought into this country, at as low a, rate as 2 per cent, and invested at as high a rate as 8 per cent. [Hos. MEMBERS: "No!"] and, indeed, higher. [Interruption.]

Mr. SPEAKER: I must ask hon. Members to allow the right hon. Gentleman to make his speech.

Mr. JOHNSTON: I do not expect that what I have to say can be very pleasant to the House. I do not intend it to be. I sit very patiently and listen to statements with which I most profoundly disagree, but I never under any circumstances endeavour to prevent the other side from getting a hearing. It is common knowledge that money brought into this country cheaply was reinvested in other lands at higher rates of interest, and when the German and Austrian banks, for reasons we need not discuss now, got into financial difficulties and the people in France, Switzerland and other countries learned that part of their money had been reinvested in Germany and Austria, they naturally called on their banks for their money. When those banks called on London banks for their money London could not find the money without the threat of a collapse. Here is the position. The men who controlled that system, who said "Hands off; you do not understand it," came to the Government and said, "You, the State, must. now create fresh conditions of confidence, not in the Government but in the City, confidence in our banking system."
They did not stop there. I do not wish to go into controversial matters about what we decided and what we did not decide. It is common knowledge that
we agreed to balance the Budget, but those men insisted, and their political parties insisted, upon balancing the Budget in a particular way. [An HON MEMBER: "In their way."] This is not the first country where they have done it. It was done in the case of Australia where Sir Otto Niemeyer and Professor Guggenheim were sent to demand a reduction of their standards by 20 per cent. The same people have control in Peru, and they dictate the Peruvian Budget. Wall Street has an officer in the Peruvian Cabinet, and, unless we are very careful, I am afraid we shall see the beginning of a system in which foreign finance will dictate to the Government of this country exactly how they shall run their affairs. [Interruption.] Mr. Montagu Norman, the Governor of the Bank of England, sent the following letter to Governor Moret, of the Bank of France—
Unless drastic measures are taken to save it, the capitalist system throughout the civilised world will be wrecked within a year. I should like this prediction to be filed for future reference.
One of the advisers to the Bank of England was Dr. Sprague, who delivered a lecture on this subject, not in the closing weeks of July or August, but on the 17th of June, and the lecture was delivered to the Statistical Society of London. Dr. Sprague is reported in the "Times" of that date as saying:
Readjustment apparently requires a further considerable decline in prices of manufactured goods, and this must involve reductions in salaries and wages. The obstacles, political and social, that must be overcome are indeed great, but this is not the affair of the economist or the statistician.
3.0 p.m.
Here we are told plainly that wages and salaries must come down, because the cost of production roust be lowered in this country, and in their opinion it can only be lowered to the new price level by cutting wages and salaries. In my judgment, the vital decision in this struggle took place upon the rate of benefit to be paid to the unemployed. If unemployment rates were lowered they made no secret of it, that the effect would be that wages would come down next. The rate of unemployment benefit, therefore, was the barrier that Wall Street set to break. This was the barrier that the City of London set to break, and I regret to say that in breaking that
barrier they succeeded in breaking the Government of this country.
After this, what next? Does anybody believe that the destruction of our standards of living will finish this business? I can understand a five-years' plan and the tightening of our belts; I can understand privation for great ends, greater national welfare, and greater prosperity and comfort; I can understand a one-year plan, but there is no pretence, not the slightest pretence, that these cuts which are now proposed are designed to change the social order in this country, and make a return of the present financial crisis impossible. Lowering the purchasing power of the people, lowering the standards of life, adding hundreds of thousands to the unemployed will only intensify our difficulties and will only produce fresh crises, and sooner Or later this House will he required to face up to the real causes of poverty, the real causes of hunger in the midst of a glut.
You are going to reduce the single man to 15s. 3d. per week; you are proposing to tax the poor and defenceless. But this problem can only be properly faced by a radical, complete and fundamental reconstruction of the aims and objects of production, and a morn equitable redistribution of the goods when they have been produced. I agree with what. was said by the hon. Member for East Leyton (Mr. Brockway). For the first time, I think, in my life, I have doubts in my mind as to our ability to evolve—[Interruption]—as to our national ability to evolve gradually And with progressively less suffering into a social order wherein the appallings poverty tragedies and miseries of our time be no more; but I am certain of this, that the steps now being taken in this House will not make it easier to evolve progressively into happier times, but will make it infinitely more difficult. You are creating a class war spirit—[Interruption]—which is bound to make reasonable consideration of our national difficulties almost impossible. Take the case of the unemployed single man. He is to be cut to 15s. 3d. a week. His rent, living in a lodging, will be 1s. a night. Seven shillings will come off for his rent, and he is left with 8s. 3d. He is left with 1s. 2d. a day to feed himself, clothe himself—[An HON. MEMBER: "And buy cigars!"]—he will not smoke on that—

Viscountess ASTOR: Do not you believe it!

Mr. JOHNSTON: On the sum of 1s. 2d. a day, I assure the Noble Lady, no man will smoke much, eat much, drink much, wear much, gamble much. He will not live very riotously. As a matter of fact, every man and every woman in this House knows that no human being can live upon 1s. 2d. a day. A woman is to be cut to 13s. 6d. She cannot live on it. A man, his wife and two children are to have 27s. 3d. per week. With house rent, as it is now, 12s. 6d. a week, there will be a balance of 14s. 9d. to feed and clothe and provide light and heat for four persons for a week—3s. 8d. per head—6½d. per day for them to live.

Major BRAITHWAITE: What about the agricultural labourer, without any unemployment benefit? [Interruption.]

Mr. JOHNSTON: I think there is an answer to that, partially. His rent is lower, and he has readier access to certain kinds of foodstuffs. But I beg the hon. and gallant Gentleman not to sidetrack me. I must soon finish, because the right hon. Gentleman who is to follow me requires a certain amount of time to develop his case. It must be within the knowledge of every hon. and right hon. Member of this House that the sums of money which are being allocated and voted for the maintenance of the unemployed in this country are insufficient to maintain body and soul together.
The time that I agreed to take is rapidly drawing to a close, but there are one or two points which, before I sit down, I should dearly love to make. Yesterday we were told much about the widow's mite, and the old age pensioner—about the offers that were pouring in to help the State in its hour of need. Cannot we have, as they had in Australia, a voluntary appeal to the holders of internal debt to reduce their rate of interest? [Interruption.] Ninety-eight per cent. answered the call in Australia; only 2 per cent. required ultimate compulsion. Why not make the attempt here? In War Loan there is more money, apart from the Floating Debt, apart from the foreign-held debt, and apart from the pre-War debt—there is more money there in the hands and in the control of
the rentier class than is required by the State in this hour of difficulty and in this hour of crisis. There is no need for a cut in your education services and no need to reduce unemployment pay. Let them come forward in this hour of crisis, those who are able, strong and willing. Give them a chance to save the State, to save the poorest of the poor, the hunger smitten and weak, from being literally and physically starved.

Mr. D. G. SOMERVILLE: Why do you not set the example?

Mr. JOHNSTON: For all the hon. Member knows there are some of us who have done so. But I am making no personal reflections. I am simply stating to the House the fact that if the holders of these blocks of War Loan, much of it escaping any taxation, could be called upon now to step forward and make a contribution, there would be no necessity for reducing the unemployed or the teachers at all. We were told yesterday in a moving peroration that England stand true. The Prime Minister in happier days wrote a book called "Socialism, Critical and Constructive," and, in an impressive and very powerful passage, he said this:
One can stand at a point in the City of London and be within a stone's throw of a handful of banks and financial agencies which by an agreement come to quite legally, though perhaps in defiance of the intention of a law or Government decree would influence materially in a very short time the business operations of the country. Nor is the growing importance of American finance in international trade an assuring event. … it is quite clear that this country will have to watch not only Lombard Street, but Lombard Street and Wall Street. If international finance is to fight within itself, the battle is to strew the world with industrial debris. If it is to combine, the slavery of labour, both in its aspects of toil and of management, is inevitable, and the politics of the world will become the will of finance. … Those who control finance can paralyse society, can make it drunk, or can keep it normal. And in all their transactions their interests are put first. … If a Labour Government came into power, they could [...]tarve it. A financiers' counter-revolution would be more effective than a soldiers' one.
The Prime Minister said the other night on the wireless that this was a war. It is. It is a war of finance against the poor. We are now faced in this land with a Budget, the essential principle of which is dictated, not by the will or desire of those who bring it forward, but
by the will and desire of alien influences; in 1931 we are faced with the spectacle, not of a National Government, but of a Wall Street Government. We were proud, many of us, to sing that Britons never shall be slaves. [HON. MEMBERS: "Hear, hear!"] Yes, and believed it. [Interruption.] We deny absolutely the right of any outside influences, financial or otherwise, to dictate, to dragoon, to coerce us. For my part—and I speak, I know, in this regard for most hon. Gentlemen on this side of the House—we are delighted that we at. any rate have no responsibility for this cruel and unnecessary attack upon British standards of civilisation; no responsibility whatever for the misery which will assuredly abide in hundreds and thousands of bumble homes in this land during the forthcoming winter as a result of the decisions which will be taken in the House this afternoon.

The SECRETARY of STATE for DOMINION AFFAIRS (Mr. J. H. Thomas): I will say at the outset that there is nothing that will lessen my admiration and belief that the course my right hon. Friend and many of his colleagues, both on the Front Bench and behind, have taken in this crisis is dictated by a conscientious belief that they are doing what they think is right, but, however much we may disagree, as we do, I am entitled at least to say that if we are prepared to respect the opinions of those who disagree with us, we are equally entitled to ask that no ulterior motive shall be attributed to those who take the other view.

Mr. COCKS: I have never respected you in my life, and I do not now.

Mr. THOMAS: The hon. Member says, with equal sincerity, that he never respected me in his life. That means, so far as he and I are concerned, that the position is status quo. My right hon. Friend the Leader of he Opposition, in his opening speech on Monday said, truly and rightly, that the whole position was very embarrassing. To-day, I heard from a colleague of mine of over 30 years' standing, what I did not expect him to say. He said that I was the temporary Member for Derby, and that my pocket was full with demands for my resignation.

Mr. CLYNES: My right hon. Friend is himself given to facetious remarks. If I
said anything that offended him, I am willing to withdraw it. My allusion to resignations was not merely to my right hon. Friend separately, but to a few who, I understand, have been asked to resign.

Mr. THOMAS: I accept the situation. I only wanted to remind my right hon. Friend that my constituency has not asked me to resign. It is unwise for either of us to indulge in prophesying results. Time alone will tell. I would say to my right hon. Friend that when in 1916 he and I were invited to join the Cabinet, he took one course and I took another, but I never for one moment accused him of any ulterior motive. I want to make it perfectly clear that I do not disagree with what was said by my right hon. Friend who has just sat down. I agree entirely with him and in the position to-day, with abundance of things on the one hand and suffering on the other, I am not going to stand at this Box or anywhere else and pretend that it is right. But I would put to him this point, that he knows, and I will endeavour to prove it, that if we, a fortnight or three weeks, ago, had been called upon merely to examine the causes of the situation, there would have been no disagreement. There would have been no split. He knows, and every one of my late colleagues knows, that we were called upon to face a certain thing. If the house is on fire, it does not help if we merely say, "What is the cause?" Proceed at once to deal with it, and you can deal with the cause afterwards.
I want to submit to the House two facts that will not be disputed. The Leader of the Opposition on Tuesday last said frankly and boldly that he was well aware, as we were all of us well aware, that there was a crisis, and he emphasised the fact that the late Government from the moment that they knew of the crisis proclaimed to the world that they realised the importance of balancing the Budget; that it was essential. Let there be no misunderstanding whatever about that point. Therefore, we come at once to the points of difference between us. The Leader of the Opposition made this statement, and in order that there should be no charge of inaccuracy I will read what he said from the OFFICIAL REPORT:
None of us liked, I think, a single one of the proposed cuts "—
Let no one after that suggest that there were no proposed cuts. I am quoting from what the Leader of the Opposition said:
None of us liked, I think, a single one of the proposed cuts, but there were two that we could not accept on any account. … These were, any interference with the efficiency of the social services and any lowering of the standard of life by cuts in the unemployment benefit. … After sitting for several clays, we found this, that. provisionally, £56,000,000 of economies had been accepted."—[OFFICIAL REPORT, 8th September, 1931; col. 32, Vol. 256.]
I am quoting from the OFFICIAL REPORT of Tuesday of this week. Therefore, want to put to the House this position. If we agreed that the Budget was to be balanced, if we agreed that there was such a crisis that we were prepared for cuts of £56,000,000, surely every hon. Member on the other side of the House is entitled to say to me, "Why did you agree, or why did any of you agree, to £56,000,000 or to consider cuts of £56,000,000 unless you realised the gravity of the situation." But. my right hon. Friend said something else. He said that we considered cuts of £56,000,000. He could have put it higher, as the late President of the Board of Trade knows. He could have said that not only did we consider cuts of £56,000,000 but that the Sub-Committee of which he was a Member, and of which the Chancellor of the Exchequer, the Prime Minister, and the Leader of the Opposition and I myself were Members, submitted for consideration not cuts of £56,000,000 but of £78,000,000.

Mr. W. GRAHAM: I am very sorry to interrupt the right hon. Gentleman, but the House must understand the facts. It was the duty of the Cabinet Sub-Committee to review the whole of the May Report, but there never was any recommendation to the Cabinet as a whole. I am very sorry to have to make the statement, but from the start we were never committed to anything at all.

Mr. THOMAS: My right hon. Friend will remember that the Leader of the Opposition stated on Tuesday, according to the OFFICIAL REPORT, that from the start he wanted to see the picture as a whole, and he said that we were starting at the wrong end. He asked; immediately he was told quite clearly, how
could we talk about the taxation, which we then knew was for £170,000,000 deficit, until we knew what the economies were? The right hon. Gentleman who has just intervened and I, the five of us, sat down for four days in agreeing to submit to our colleagues measures that had received our consideration; and they were £78,000,000.

Mr. J. JONES: rose—

Mr. SPEAKER: If the right hon. Gentleman does not give way, the hon. Member for Silvertown (Mr. J. Jones) cannot intervene.

Mr. THOMAS: My right hon. Friend the late President of the Board of Trade has already indicated that I have given a fair interpretation.

Mr. W. GRAHAM: indicated dissent.

Mr. THOMAS: Then I repeat the words of the Leader of the Opposition that I have already read out from the OFFICIAL REPORT. The Leader of the Opposition said:
After sitting for several days we found this, that, provisionally, £56,000,000 of economies had been accepted."—[OFFICIAL REPORT, 8th September, 1931; col. 32, Vol. 256.]
Let me examine what those £56,000,000 economies were. The Home Secretary has spoken, the former Lord Privy Seal has spoken. I am going to submit that there is not in the Bill that we are defending to-day on any item, a penny difference in relation to the £56,000,000 economies that the Leader of the Opposition mentioned.

Mr. LANSBURY: This is rather important. I understand the right hon. Gentleman is going now to quote from Cabinet documents?

Mr. THOMAS: No.

Mr. LANSBURY: If the right hon. Gentleman quotes these proposals, it must he from a Cabinet document. Am I to be entitled to quote from the Minutes of the Cabinet?

Mr. THOMAS: My right hon. Friend must know perfectly well that this kind of thing is not minuted. In mentioning the £56,000,000, I am taking the figure of the Leader of the Opposition. Let it not be forgotten that that is the figure that the Leader of the Opposition mentioned,
the gross figure. I repeat it. I say that in the Economy Bill that we are discussing and on which we are to vote on Monday, regarding education, for instance, so far as the teachers' salaries are concerned there is not a penny difference compared with what we instructed the late President of Education to conduct his negotiations on. My right hon. Friend is there, and he, I am sure, will not deny my statement when I say that his minimum instructions for negotiation were on the basis of a 15 per cent. cut.

Mrs. MANNING: Then it was not negotiation.

Mr. J. JONES: What about trade unionism?

Mr. SPEAKER: This House has a great reputation for fairness. I hope we shall maintain it.

Mr. THOMAS: I have said, and I repeat., that the same figure was there. Then as to roads—not one penny change. The services, so far as soldiers and sailors are concerned—no difference from the £56,000,000. Not a penny of difference. Teachers, I have dealt with. Policemen, not one penny difference. Agriculture, no difference. Health, no difference. Empire Marketing Board, no difference. Colonial Development Fund, no difference. I have dealt now with—[An HON. MEMBER: "What about the Civil Service?"] I hear the Civil Service mentioned in an interruption. Before there was anything, exclusive of this £56,000,000, my colleagues will remember this difficulty—that there was the 5 per cent, or the 5 points applying to the Civil Service, and we unanimously agreed that it would be absurd for that not to be applicable when we were going to make cuts in the other people. Is not that true? I know my colleagues too well to think that it will be denied.
Now we cone to the question of the unemployment benefit, and I again quote the Leader of the Opposition. He said that the one thing above all was "no cuts in unemployed pay." That is the statement which hon. Members opposite heard and cheered. My colleagues will be able to correct this statement if it is wrong. First, let us agree on what is a cut. To put it shortly, a cut means receiving something less than you are
receiving now. Do not let us quibble about that point. As to "no cuts on unemployed pay" will any of my colleagues deny that we were faced with this difficulty. Do not misunderstand me. None of them welcomed it. I am not putting that point. I am dealing with the dire necessity. I say that every one of us hated it, but do not let us run away from the fact. Is it not a cut when the 52 weeks are reduced to 26? Is not that a cut? [An HON. MEMBER: "It all depends!"] Was it not a cut when we had to save, on a close examination, by a means test, on transitional benefit? Is not that a cut?

Mr. LANSBURY: I want to ask the Prime Minister whether we are going to be allowed to give an account of what happened in the Cabinet?

The PRIME MINISTER: It is perfectly clear that nothing that has been said up to now has been kept in the Cabinet, because on the Cabinet instructions those figures were communicated to the leaders of the two parties.

Mr. LANSBURY: That will not do. I am sorry to interrupt, but the right hon. Gentleman is stating certain things as to what happened in the Cabinet on these particular figures, and I am challenging the accuracy of the whole of his statement.

Mr. THOMAS: I am stating what my right hon. Friend knows is true. These figures that I have quoted on every item were by the instructions of the Cabinet, empowering the Prime Minister to convey to the other parties what we agreed to.

Mr. W. GRAHAM: I think the House will agree that there is no Member who deplores this development more than I do. [Interruption.] I deplore it on the, personal side, but I want to ask whether the Prime Minister all along did not make it perfectly clear that in any statement which he made to the representatives of other political parties and to the representatives of the Bank of England, he was conveying figures which had not been accepted by his Cabinet?

Mr. THOMAS: rose—

HON. MEMBERS: The Prime Minister!

Mr. SPEAKER: Order! We cannot conduct the Debate in this way.

Mr. THOMAS: I am quoting from the OFFICIAL REPORT. I am asking the House—

HON. MEMBERS: The Prime Minister!

Mr. SPEAKER: After all, we are discussing what took place in the Cabinet, and only a certain number of Members in the House were in the Cabinet. If those statements are challenged, they can be contradicted by somebody else afterwards on the other side. We shall get no further forward with these interruptions.

Mr. McSHANE: On a point of Order. With great respect—

Mr. SPEAKER: There can be no point of Order.

Mr. THOMAS: I am sure the House will see that I am quoting now from the Leader of the Opposition. [HON. MEMBERS: "No."] Do not misunderstand me. I will quote again the Leader of the Opposition's words:
We have reached the stage when £56,000,000 of proposed economy cuts were provisionally accepted.

HON. MEMBERS: Provisionally!

Mr. THOMAS: I at once say then that if the conception is that the Prime Minister and the Chancellor of the Exchequer, representing the Government of the country, are told by their colleagues to go and meet someone else, and tell them certain things provisionally, what is the decency and where is the decency of repudiating it afterwards? [Interruption.] My right hon. Friend interrupts now, and says that he was told beforehand. If that is to be the line of argument and defence, I will put this to my right hon. Friend. Why did we sit then, in the midst of this crisis, day after day if, at the end, we never intended what we were dealing with? You will not get over the fact that if the Leader of the Opposition himself said that as evidence of our anxiety to balance the Budget we provisionally agreed to this, then either we agreed that the Budget ought to be balanced, or the £56,000,000 meant
nothing. I am still dealing with the statement made outside and made inside this House that, so far as cuts on the unemployed were concerned, they were utterly and absolutely opposed. That is a fair statement of what was said. I ask my colleagues this. If deducting a shilling from the benefits of the unemployed was not a cut, what was it?

Mr. W. J. BROWN: A variation.

Mr. THOMAS: Therefore, my right hon. Friend was under no misapprehension that that would have been a cut, but you also know that it was a very serious proposal.

Mr. LANSBURY: But not from me.

Mr. THOMAS: I leave it at that. Do not let anyone else go out saying that, as far as they were concerned, they never for one moment either considered or would have entertained any interference—[Interruption.] I am not dealing with particular individuals; I am dealing with what was considered by my colleagues as a whole, and I repeat that, as far as concerns the Economy Bill which is now being considered, and upon which this House must ultimately vote, the £56,000,000 voted by the Leader of the Opposition on education, policemen's salaries, social services, Army and Navy and roads, is there a penny difference in what I understood and my colleagues understood? [Interruption.] I will put it this way: They were the items which the Prime Minister and the Chancellor of the Exchequer were empowered to show to the other parties.
My right hon. Friend who preceded me asked me why we did not meet the position like Australia did. I presume that he quoted Australia because they had a Labour Government. I am going to quote Australia because no one with any knowledge of the Australian political situation can accuse the Government in Australia, which has an overwhelming and absolute majority, of being composed of people who are not interested in the workers. My hon. Friend only quoted one point, and asked why we did not have a conversion like Australia. We have already had an indication on that point from the Chancellor of the Exchequer, and so far as anyone speaking on that Bench is concerned, I do not think that
they can do better than say that nothing but a voluntary conversion could be brought off. [Interruption.] The hon. Member who interrupts may say that, but no one on the Front Bench would say so. Australia had a Labour Government with a Labour majority and faced a crisis not so grave as ours, and this is their decision—20 per cent. cut in War pensions—

Mr. BROCKWAY: At the command of the Bank of England.

Mr. THOMAS: —12½ per cent. cut in Old Age Pensions, 20 per cent. cut in maternity benefit. My hon. Friend says that it was done at the dictation of the Bank of England. There is a Labour majority—

Mr. J. JONES: Ah, they could not help themselves.

Mr. THOMAS: The interruption of my hon. Friend means that the Australian Government, because they could not help themselves, had to face the facts. That is exactly the position to-day in this country, and my answer to my colleague on the other side of the House is that it does not matter what Government deals with it, the causes that led up to this crisis must be tackled. A number of my colleagues opposite have sat on the International several times. They were in Germany and Austria when the flight took place. They know the position the trade unions there were in. The currency was in such a condition that we in this country had to pay all the expenses—it was not a question of a 10 per cent. cut; the money had practically all gone. That is the alternative. [Interruption.]
You can make your own defence in your own way. I give my answer in my own way. I answer by saying that the proposals which are embodied in the Economy Bill, so far as concerns the cuts
in the wages of all workers, excepting none—teachers, policemen, soldiers, sailors, civil servants, all—everyone of those cuts is no different from what it would have been if a Labour Government had faced its responsibilities. [Interruption.] It may be that friends will shout, but if trade union negotiations are being conducted and if an executive committee instruct a president or general secretary provisionally to go and do something, what would be said about that executive committee if the president and general secretary came back and then they ran away from it? That is the answer. [HON. MEMBERS: "No answer!"] Hitherto I have not run away. [HON. MEMBERS: "Black Friday!"] During the War I took a stand. It was not the popular stand, but I had the courage of my convictions. I have got the courage of my convictions now. I believe, having regard to all the circumstances, that there was no other course. No one liked the cut, no one desired the cuts, but the choice was not teachers' salaries, a cut in police pay, the unemployed cut; the choice was whether we would take the responsibility of a certain cut or of a disaster to the working classes that would have been irretrievable.

Ordered, "That the Debate be now adjourned."—[Mr. Benjamin Smith.]

Debate to be resumed upon Monday next.

The remaining Orders were read, and postponed.

Whereupon Mr. SPEAKER adjourned the House, without Question put, pursuant to Standing Order No. 3.

Adjourned accordingly at Two Minutes after Four o'Clock, until Monday, 14th September.